Indian Economy - News & Discussion Oct 12 2013

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nawabs
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Re: Indian Economy - News & Discussion Oct 12 2013

Postby nawabs » 04 Feb 2015 02:16

RBI wants foreign investors to shift to long-term debt

http://www.business-standard.com/articl ... 103_1.html

Last year, the central bank barred Foreign Portfolio Investors from purchasing short-term govt securities

“When we limited reinvestment in government securities below 3 years, we did not do the same thing for corporates because we wanted to develop a corporate bond market also. There has been some of that but there is again sitting too much at the short-end. We would like to nudge people into the longer-end. When you reinvest, you reinvest in three years and above securities,” said RBI governor Raghuram Rajan today.

In order to incentivise long term investors, RBI also enabled reinvestment of coupons in government bonds even when the existing limits are fully utilised. Allowing re-investment of coupons could effectively free up $2 billion for purchases of government bonds each year, Barclays estimated on Tuesday. It also implied India may not raise the current overall investment limit of $30 billion for overseas investments any time soon.

Last year RBI had barred Foreign Portfolio Investors (FPIs) from purchasing short-term government securities. The existing investments in treasury bills by FPIs was allowed to taper off on maturity or sale. FPIs were permitted to invest in government bonds with a minimum residual maturity of three years. However, no such condition was placed for corporate bonds.

“All future investment by FPIs in the debt market in India will be required to be made with a minimum residual maturity of three years. Accordingly, all future investments within the limit for investment in corporate bonds, including the limits vacated when the current investment by an FPI runs off either through sale or redemption, shall be required to be made in corporate bonds with a minimum residual maturity of three years,” said RBI in the monetary policy statement today.

RBI also said that FPIs will not be allowed to invest incrementally in short maturity liquid/money market mutual fund schemes.

"RBI wanted to ensure that money inflow into the debt market is not just for the short term. They do not want FPIs investing merely for the interest rate differential. The real concern for the banking regulator is the strength of the currency. While several global currencies have weakened against the US dollar, rupee has not moved much," said Badrish Kulhalli, head of fixed income at HDFC Life.

RBI also introduced new bond futures with 5-7 year maturities, as well as 13-15 year maturities, complementing the current 10-year tenors unveiled last year.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 04 Feb 2015 02:26

Currently the RBI rules are $30 billion of domestic debt can be held by foreign investors, of which $5 billion has to be long term debt (>=3 years). Good move on their part to push stable long term bond holdings rather than short term bills. Considering the appetite for Indian debt, they should be able to raise the limit to $40-50 billion with $10-15B required in long term holdings.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Prem » 04 Feb 2015 05:36

India looks set to harvest bumper wheat crop in 2015
http://economictimes.indiatimes.com/new ... 107145.cms

NEW DELHI: India looks likely to harvest a bumper wheat crop this year, its eighth in a row to exceed demand, possibly encouraging the government to allow exports from overflowing grain bins.
A slow start to the planting season and a less than expected rise in the price at which the government will buy new-season wheat from farmers had raised some apprehension about a drop in output. But as the weather turned favourable, planting gradually picked up the usual pace. "Every single trend suggests that we are heading for a harvest as big as last year," Indu Sharma, chief of the state-run Directorate of Wheat Research, told Reuters. But Sharma and her colleagues are keeping an eye out for any sudden rise in temperatures in February and March, as dry weather could damage the crop.
The crop has to now been unscathed apart from some minor fungus which was "highly localised", Sharma said. Indian farmers grow only one wheat crop a year. Planting starts in October, with harvests from April. Wheat acreage hovers between 29 million and 31 million hectares. The area planted with wheat is 3 per cent lower than the previous year, according to provisional data from the farm ministry which updates its numbers as it gathers more information. The reduction in area was "marginal and well within the range", said Farm Commissioner JS Sandhu, who oversees crop planting.
"The last few spells of rains, intermittent fog followed by sunshine and no large-scale pest infestation indicate a big crop size, at least as big as the 2014 harvest," Sandhu said. In 2014, India, the world's biggest wheat producer after China, harvested a record 95.91 million tonnes, bumping up stocks to three times the target.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 04 Feb 2015 05:57

RBI continues with the opaque description of its decisionmaking logic. First, Rajan cuts rates out of cycle in January claiming there had been a material chance since the December policy meeting where he did nothing. Then he keeps rates as they are despite latest manufacturing PMI, core sector IIP, new series GDP and inflation numbers all pointing to a continued weak industrial growth process due to the existence of a high debt burden. Banks too have not passed on rate cuts because of their desire to manage existing NPAs on their books first.
RBI signal: Budget first, rate cuts later
“Given there was no development on the inflation or fiscal fronts since January 15, we have maintained status quo on interest rates... We have the Budget coming up. We will have new GDP (gross domestic product) numbers on February 9, which will reflect a whole new view of what is happening in the Indian economy,” Rajan told reporters after announcing the sixth bi-monthly policy review on Tuesday.

While the fiscal deficit target of 4.1 per cent of GDP for this financial year seems achievable, the central bank will keenly track whether Finance Minister Arun Jaitley sticks to the medium-term target of 3.6 per cent fiscal deficit for FY16 and three per cent the following year.

“With the Budget coming up in a few weeks, the next rate cut now seems likely to be off-cycle, perhaps in the first week of March,” Deutsche Bank said in a note to clients.

But the consensus in the market remains the central bank will opt for a 50-75-basis point rate cut this calendar year, including one before the next policy review, scheduled for April 7. “With a vindication that the ideal real rate of interest could be 1.5-2 per cent, the underlying message from the monetary policy is policy rates could go down by up to 75 basis points from the current level, assuming retail inflation is 5.5 per cent. The good thing, however, is rate cuts might be frontloaded so that the recovery is faster,” State Bank of India (SBI) said.

More downward pressure on inflation:
Petrol price cut by Rs 2.42 per litre; diesel by Rs 2.25 per litre
The oil marketing companies on Tuesday slashed petrol prices by Rs 2.42 a litre and diesel price by Rs 2.25 a litre in line with the decline in global oil prices.

After the price revision, to be effective from midnight, unbranded petrol will cost Rs 56.49 a liter in Delhi as compared to Rs 58.91 currently. Also, diesel will be priced at Rs 46.01 a liter, down from Rs 48.26 at present.

This is the 10th straight reduction in petrol price since August and sixth in diesel since October. Petrol and diesel prices were last cut on January 17 by Rs 2.42 and Rs 2.25 a liter, respectively.

“Since that price revision, international prices of both petrol and diesel have continued to be on a downtrend and the rupee-dollar exchange rate has appreciated. The combined impact of both these factors warrants a decrease in retail selling prices of both petrol and diesel,” the largest state-owned fuel retailer Indian Oil Corporation said.

The global crude oil prices have slumped to a five-year low of $47 per barrel, thanks to a global supply glut backed by a surge in the US shale output coupled with the dip in demand from major consuming economies in Europe and Asia.

The Indian basket of crude oil price has also declined to $50 per barrel from a peak of $115 per barrel in June 2014.

Ex-owners of cancelled coal mines put up tough fight in e-auction
Former owners of the cancelled coal mines have bid aggressively for re-allocation of these blocks. Companies such as Jindal Steel & Power (JSPL), Hindalco and CESC are vying for the blocks they lost following a Supreme Court's judgment. Twenty-three operational coal blocks have been put on the block in the first phase of auction. Out of this, six with end-use in power generation saw 54 bids. The remaining blocks, which were kept for unregulated sectors - iron & steel, cement, and captive power production - received a whopping 124 bids.

The names of bidders who submitted technical bids for the upcoming e-auction were disclosed on Tuesday. These bids will be evaluated by a multi-disciplinary 'technical evaluation committee', which will shortlist the bidders for participation in the electronic auction to be conducted on the MSTC portal from February 14, 2015.

The government plans to have a two-pronged strategy for e-auction of cancelled coal blocks. Where end-use is generation of power, there will be reverse auction. For unregulated sectors, there will be forward-bidding model.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby nawabs » 04 Feb 2015 20:40

RBI chief Raghuram Rajan says inflation still a concern

http://www.business-standard.com/articl ... 877_1.html

National Skill Development Policy to be ready in 6 months

http://www.thehindubusinessline.com/eco ... yndication

As a precursor to such a move, the Government was rationalising and integrating 73 skill development, vocational training and entrepreneurial development schemes, currently run by 20 ministries or departments.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby VinodTK » 05 Feb 2015 11:51

Falling oil prices pull India's budget out of the fire
Falling oil prices have been a major windfall for India: Just weeks ago it faced failing to meet fiscal deficit targets, but can now expect a budget that not only hits its targets, but also provides extra cash to support reform.

The coming budget for fiscal 2015/16 (April-March), which will be unveiled on Feb. 28, is widely seen as a test of Prime Minister Narendra Modi's ability to lead economic reform.

Fortunately for Modi, the economic climate has handed him a chance to pass that test with flying colours: Budget planners are optimistic that he will set Asia's third-largest economy on a path for growth of 7 percent to 8 percent over the next two years.

"The situation is far better now than in December," said one finance ministry official, who spoke to Reuters despite a ban on contact with the media in the secrecy-shrouded run-up to the presentation of the annual budget. "The budget will deliver on Modi's promise of better days for the economy."

The halving of global oil prices since mid-2014 has allowed the Modi government to raise diesel and petrol fuel taxes and cut diesel prices by 25-30 percent – a windfall gain for households as well as businesses, and dampening inflationary pressures in the economy.

The government has pocketed nearly $3.5 billion from repeated hikes in tax on fuel while the central bank cut interest rates by 25 basis points last month, and has hinted at further rate cuts if inflation declines.

Modi was elected last May on pledges that he would create jobs and rejuvenate the sagging economy, but investors and economists were disappointed by his first interim budget in July and a distinct lack of early progress in fixing structural economic problems, so the slide in oil prices has been a boon for one of the world's top crude importers - and Modi's administration.

"Let's accept that I am lucky, but you have saved money. If Modi's luck is benefiting the people, what can be more fortunate?" Modi said in a speech last weekend.

HEADROOM FOR REFORMS

Officials say lower fuel subsidies along with recent diesel tax hikes could together add almost 1.1 trillion rupees ($18 billion) to the 2015/16 budget, and they plan to spend about 500 billion ($8 billion) of that on Modi's flagship infrastructure and manufacturing initiatives.

With more money flowing into India's stock market after the European Central Bank unveiled an estimated 1.1 trillion euro stimulus, the government is ramping up its programme of selling stakes in state companies. It raised $3.65 billion from a 10 percent stake in Coal India last week and is moving fast to line up others.

As finance ministry officials work feverishly to have the budget presentation ready on time, investors appear to be upbeat.

The benchmark BSE share index has risen more than 5 percent this year, making India one of the best-performing markets. Foreign investors have placed about $5.5 billion in India's debt and equity markets.

The fall in oil prices has given Finance Minister Arun Jaitley headroom for subsidy reforms that would rein in spending on cooking gas, fertilisers and food subsidies and reduce the fiscal deficit to 3.6 percent of GDP from an estimated 4.1 percent for the current financial year.

Jaitley is also likely to unveil tax reforms, such as a goods and service tax that would absorb most federal, state and local taxes by April 2016, ease tax rules on transfer pricing, and address some overseas investors' concerns.

To be sure, problems in the economy remain, and Modi is under pressure to implement measures to revive consumer demand and give corporate India the confidence to invest.

"Everyone knows that the honeymoon period for government will not continue forever, we have to speed up reforms before it is too late," said another official, who has direct knowledge of onging budget discussions.

The budget will support Modi's "Make in India" drive with tax incentives for the manufacturing sector, lower import taxes on production inputs and higher duties on final products, officials said. Taxes on gold imports could also be reduced following a sharp decline in the current account deficit.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby VinodTK » 05 Feb 2015 12:36

Another BRIC overtook Russia in the billionaire rankings
Russia just lost its spot as the world's third largest community of billionaires. It was knocked down to fourth place by another BRIC country: India.

That's according to the latest "global rich list" from publisher Hurun Report, which ranks dollar billionaires around the world.

Ten Russians dropped out of the ranking this year, while India's number jumped by 27 people up to 97 in total.

Their combined wealth is $266 billion , and Mukesh Ambani, worth $20 billion, holds his place as India's richest person. (He also has one of the flashiest houses on the planet.)

India has become a hotspot for investment since pro-business Narendra Modi was voted in as prime minister last May. Stocks have rallied and helped to line the pockets of Indian business owners and investors.

Meanwhile, weak oil prices, a plummeting currency, and sanctions from the West have hurt Russia's wealthy.

Props to India, but the US and China still dominate. They're home to 537 and 430 billionaires each, and together account for nearly half the world's total.

Here are the top 20 countries:

USA: 537
China: 430
India: 97
Russia: 93
UK: 80
Germany: 72
Switzerland: 60
Brazil: 56
Chinese Taipei: 48
France: 46
Japan: 45
Canada: 39
South Korea: 33
Turkey: 33
Australia: 32
Thailand: 29
Italy: 28
Singapore: 26
Indonesia: 24
Spain: 19

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Gus » 05 Feb 2015 12:51

this oil windfall is a golden opportunity. this money will be used to revive the economy. at a much faster pace than without it.

cometh the man, cometh the time. modi is incredibly lucky with the timing of the oil price fall.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby pankajs » 05 Feb 2015 12:56

On the Billionaire ranking ... expect the number of Indians on that list to double in 3-5 years.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby kmkraoind » 05 Feb 2015 13:31

Taiwanese ODM Inventec keen on opening a production facility in Chennai

Inventec, the Taiwanese ODM which makes notebooks, consumer electronics, mobile phones and server products, is looking to set up a production facility in Chennai, according to Digitimes. The production is expected to begin by the third quarter of 2015 said the company.

According to industry-watchers, the first devices that will be rolled out of the Chennai factory would be smartphones and other devices for Chinese phone maker Xiaomi. Inventec hasn’t spoken about the kinds of products it aims to manufacture in India.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 05 Feb 2015 14:03

Foreign inflows into long term Indian govt debt continues to mount:
India’s 10-Year Bonds Advance a Second Day as Debt Inflows Climb
Overseas investors bought $464 million more rupee-denominated notes than they sold on Feb. 3, the latest exchange data show. That took inflows for this month to $703 million after net purchases of $3.3 billion in January, which were the biggest since July. Investors have flocked to buy the oil-importing nation’s securities amid central bank efforts to stabilize the rupee and on optimism the plunge in Brent crude prices will help improve the current-account deficit.

The yield on the notes due July 2024 dropped two basis points, or 0.02 percentage point, to 7.70 percent as of 11:08 a.m. in Mumbai, prices from the Reserve Bank of India’s trading system show. The rate was at 7.65 percent on Feb. 2, the lowest close for benchmark 10-year debt since July 2013. The rupee retreated for a second day.

“Investment in debt instruments is the best option available right now given the global uncertainty,” said N.S. Venkatesh, the Mumbai-based head of treasury at IDBI Bank Ltd. “Indian bonds will remain attractive given that the yields they offer are much higher relative to many countries.”
Local 10-year notes pay 596 basis points more than similar-maturity U.S. Treasuries, data compiled by Bloomberg show. Foreign inflows into rupee-denominated corporate and government debt were a record $26 billion last year.

RBI Governor Raghuram Rajan kept the benchmark repurchase rate at 7.75 percent this week after an unscheduled cut on Jan. 15, signaling that he wants to see Prime Minister Narendra Modi’s first full-year budget on Feb. 28 before easing further.

The rupee fell 0.3 percent to 61.92 a dollar, prices from local banks compiled by Bloomberg show. The currency has climbed 1.8 percent in 2015, the best performance in Asia, excluding Japan. Three-month offshore non-deliverable forwards declined 0.3 percent to 62.83. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

The rise in foreign holdings of Indian debt has been surprising. RBI has had to repeatedly increase the upper limit, from $20 billion to $25B and now the current $30 billion (at least $5 billion in long term) . They might increase that too, considering they received more than $3 billion just in January. And this is in addition to all the FII inflows into equities, as well as FDI inflows.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_28640 » 05 Feb 2015 15:16

India could be a 10 Trillion $ economy in 15 Years :shock:
Clicky

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Gyan » 05 Feb 2015 18:08

Deleted
Last edited by Suraj on 05 Feb 2015 22:37, edited 1 time in total.
Reason: Personally attacking public personalities is unwelcome.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby pankajs » 05 Feb 2015 18:41

http://economictimes.indiatimes.com/ind ... 134397.cms
PM Modi's Make in India: China's Huawei makes $170 million investment in R&D centre
Chinese telecom company Huawei Technologies Co Ltd has invested $170 million to open a research and development centre in India as it ties itself to Prime Minister Narendra Modi's "Make in India" campaign, the company said on Thursday.

The campus in Bengaluru, is the first such investment made by a Chinese company in India and will be used to develop software components, Huawei said.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_28640 » 05 Feb 2015 18:58

pankajs wrote:http://economictimes.indiatimes.com/industry/telecom/pm-modis-make-in-india-chinas-huawei-makes-170-million-investment-in-rd-centre/articleshow/46134397.cms
PM Modi's Make in India: China's Huawei makes $170 million investment in R&D centre
Chinese telecom company Huawei Technologies Co Ltd has invested $170 million to open a research and development centre in India as it ties itself to Prime Minister Narendra Modi's "Make in India" campaign, the company said on Thursday.

The campus in Bengaluru, is the first such investment made by a Chinese company in India and will be used to develop software components, Huawei said.

The deal was long in the works if I'm not wrong

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Uttam » 05 Feb 2015 19:12

Gyan wrote:{deleted}


@Gyan: Time and again you have attached Rajan with absolutely unsubstantiated allegations. There is no basis for such attacks. There has been enough discussion on this forum as well as in the media on the logic behind the monetary policy followed by RBI. You may disagree with his policy but there is absolutely nothing you have that questions his integrity. Mind you Rajan is not the sole authority to take decisions regarding interest rates. He has a group of deputy governors who will and should openly oppose him if you are correct.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Uttam » 05 Feb 2015 20:17

HDFC Bank raises close to Rs 10,000 cr in ‘largest’ share sale

This along with the news of SBI (Rs 15,000 crore) and PNB (Rs 5,000 crore) follow-on-offers is excellent news for the credit markets in India. These equity capital raising offers will increase risk-adjusted capital, thus making these banks more compliant with Basil accord and further allow them to make risky loan but with potential for greater growth. The fact that the market has a lot of appetite for such equity offerings points to great things to come for Indian market.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 06 Feb 2015 03:23

FY16 disinvestment target to be around Rs 43,000 cr
Finance Minister Arun Jaitley in the Budget for 2015-16, is likely to target around Rs 43,000 crore from disinvestment proceeds, almost the same level that the government expects to realise from stake sale in PSUs this financial year.

Elaborating why the target can't be put in the higher range, the source said: "We can't go ahead with another big ticket divestment in Coal India (CIL) within the next financial year. Although, the market is trading high, PSU stocks are under-valued."

The government last week sold 10 per cent stake in CIL for Rs 22,558 crore. It has to sell another 5 per cent in the company to achieve the minimum 25 per cent public shareholding norm as prescribed by market regulator Securities and Exchange Board of India (Sebi).

31 major minerals to be notified as minor minerals
The government has decided to notify 31 major minerals as minor ones, Mines Minister Narendra Singh Tomar said here on Thursday.

“This is being done to devolve more power to the states and, consequently, expedite the process of mineral development in the country,” Tomar said, speaking on the sidelines of the 54th meeting of the Central Geological Programming Board (CGPB).

State governments are allowed to make rules to regulate the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals. “These 31 minerals account for 55 per cent of the total number of leases and nearly 60 per cent of the total leased area,” stated the ministry.

Earlier, there were 24 listed minor minerals such as building stones, gravel, ordinary clay, ordinary sand, and limestone used for lime burning and boulders, among others. The total number of minor minerals will now become 55.

The 31 minerals to be added to the list include agate, ball clay, barytes, calcareous sand, calcite, chalk, China clay, clay (others), corundum, diaspore, dolomite, dunite/pyroxenite, felsite, felspar, fireclay, fuschite quartzite, gypsum, jasper, mica, quartz, sand (others) and shale.

PM Jan Dhan Yojana bank accounts at work:
DBT in LPG scheme covers over 66% consumers
The petroleum ministry has managed to cover two-thirds of the country’s 150 million consumers of liquefied petroleum gas (LPG) under the modified version of the Direct Benefits Transfer in LPG scheme launched nationwide on January 1.

The scheme, named Pratyaksh Hastantarit Labh, is the largest cash transfer programme in the world. It aims at directly transferring cash subsidy on cooking gas into the bank accounts of consumers thereby weeding out duplication and plug leakages. The petroleum ministry the government had transferred Rs 4,299 crore since November 15 to consumers in 113.3 million transactions.

Prime Minister Narendra Modi called the increased coverage of the scheme a “momentous accomplishment” and tweeted the scheme will "bring an end to black-marketeering and subsidy will reach people more effectively. Its role in nation-building is important".

Under the scheme, LPG cylinders are sold at market rate. Consumers receive Rs 558 in their bank accounts so that they can buy LPG at market rate of Rs 605 per 14.2-kg cylinder. Subsidised LPG currently cost Rs 417 per cylinder. According to oil minister Dharmendra Pradhan, the scheme will help the government save 10-15 per cent of the Rs 40,000 crore annual LPG subsidy.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Prem » 06 Feb 2015 05:08

India’s path to a $10 trillion economy
Trillion Here and Trillion There ,we will soon be talking about real money

. Indeed, this approach is similar to the economic development experience of East Asian economies whereby the path towards a nation’s sustained prosperity lies in effectively mobilising both labour and non-labour resources. A reasonable initial goal would be to target lifting India’s GDP to $10 trillion (and per-capita income to about $7,500) from the current level of close to $2 trillion ($1,600). This goal should be achievable in about 15 years’s time as long as real GDP growth and inflation average 8% and 4% respectively over this period.We believe this path to sustained prosperity entails two broad sets of reforms. In the initial phase, the focus of policy measures needs to be sustaining 6.5-7% growth with moderate and stable inflation. Indeed, policymakers have been judiciously fixing the root causes for the slippage in GDP growth to 5%, effectively reversing the distortions in the productivity dynamic. First, Centre plus states combined fiscal deficit, which has been painfully reduced from the peak of 9.9% in 2008-09 to an estimated 6.5% of GDP in 2014-15, will need to be further reduced to 5% of GDP. Second, the government needs to ensure that its policies do not intervene in the labour market to ensure that wage growth matches productivity growth. We believe high rural wage growth of about 18% during 2009-13 was a key factor behind the spike in inflation to 10% in that period.Third, real interest rates need to be maintained in a positive territory to anchor inflation expectations and also to check the rise in property prices. Finally, ensuring a smooth functioning of the executive branch, faster implementation and increased transparency of government policies for investment approvals is needed to revive investment.
As the effects of the reforms that are currently being implemented begin to feed through to the economy in terms of improved productivity and macro stability, the economy will be on track to transition back to 6.5% GDP growth in the next 18 months. The goal of 8% sustainable growth needs a 15-year vision of mediumterm reforms — some of which are perceived to be politically-sensitive.The list of these measures is long, but the government should prioritise reforms in the areas of land, labour, tax, infrastructure and overall ease of doing business. Indeed, the recent decisions taken by policymakers suggest that they are determined to accelerate the pace of implementation in each of these areas.Since the implementation of the new Land Acquisition Act early last year, the process of land acquisition had come to a virtual standstill. :( To address this, in December 2014, the government promulgated an Ordinance that exempted five key categories of projects — which includes infrastructure and public-private partnership (PPP) projects where landownership is with the government —from consent and social impact assessment requirements. Converting this Ordinance to a law will be a critical starting point for kick-starting the investment cycle. In the area of labour laws, the government has made a series of important changes at a faster-than-expected pace. The most important step has been to reduce the discretionary powers of local labour inspectors, which has been a key bugbear of manufacturing companies. Moreover, select states have taken the lead to increase the flexibility of labour market regulations. Going forward, the government is considering a complete overhaul of the 44 labour laws into five uniform codes, which we think can be a pathbreaking reform if it can get Opposition support in ParliamentThe goods and services tax (GST) is the single-biggest indirect tax reform that will bring about uniformity in taxation system and improve the competitiveness of the manufacturing sector. To this end, the government has successfully built a consensus among states and has introduced the GST Constitutional Bill in Parliament. . More aggressive policy reforms are needed to revive infrastructure spending to around 8-9% — necessary to reach the 8% GDP growth goal — from the current estimated level of about 6%Finally, India is currently poorly ranked as 142nd out of 189 in the World Bank’s ease-of-doing-business index. While the recent streamlining of investment approvals has helped to expedite the process and improve sentiment, more steps are still needed. The critical step needed in this area is to take up a major training programme and change the incentive structure at the central and state government-levels to bring about change in the attitude of the field officers to welcome industrial development effort.Taken together, these important changes in the macro environment, when fully implemented, should have a lasting impact on boosting economic development in India, and will go some way in achieving the ambition of creating a $10-trillion economy by 2030. ( This is MMSeven years additional from our last guess

Theo_Fidel

Re: Indian Economy - News & Discussion Oct 12 2013

Postby Theo_Fidel » 06 Feb 2015 05:45

Wow! 10 Trillion would be Amazing. It would mean....

Per capita Income of ~ $8,000!
Per household income ~ $40,000!

- This would end all menial poverty in desh once and for all.

City income would be more like $12,000 per capita.
A state like TN would have total GDP ~ $1 Trillion.
City of Chennai would have CDP of ~ $ 200 Billion.
A municipal tax income of $12 Billion +/- per year.

We can finally do some real investment. HSR, elevated freeways, town homes, 100% HS education, all become possible. Folks will start ROI'ing in droves.... ...though they should not...

The last doubling from $1 Trillion to the present $2 Trillion took 7 years. 2007-2014. The next doubling to $4 Trillion can definitely take place by 2021. Then $8 Trillion by 2028. hop skip and a jump to $10 Trillion by 2030.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Prem » 06 Feb 2015 07:54

IMVHO, Indian economy have finally achieved critical Mass, Maans (fat), Maal, Malai, Mental Makeup & Modi Mantra to Make In India , All together to make this dreams come true. 80% of this was achievable by 2023 had UPA been put to sleep by ABV.Quadrupling in 13-14 years and 1-2 years to fill it to brim of 10T Mark Trim And Onward to Acche Din, Raats and Saals.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby csaurabh » 06 Feb 2015 21:02

Dont count chickens before they hatch onlee... Indian economy has serious foundational problems.
socialism, license raj, weak manufacturing base, crap education system, fondness for imports..

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Frederic » 06 Feb 2015 23:39

Add to that archaic labour laws Sirjee

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 07 Feb 2015 00:13

Regarding laws and administrative bottlenecks, the government realizes it cannot impose this change from the top. Too many entrenched interests will simply revolt and push back. That was the mistake previous non-NDA administrations made multiple times. Instead, the government is changing the rules of the game by simply asserting that they'll change the legal framework such that states who wish to amend their administrative and labour laws with more liberal business friendly ones, can do so without opposition from the center. By doing so, it is letting progressive states forge ahead with effective policies, and thereby undermine entrenched interests elsewhere and result in the liberal laws expanding to other states trying to compete.

This is a very effective and shrewd approach - reforms being implemented not by top down diktat, but by the center simply stepping back and nudging one or more favored states to go ahead with vanguard changes. In the current situation, Gujarat (industrial, investment and trade facilitation), MP (socio-economic development) and Rajasthan (labour law development) all play their roles as laboratories of progressive new policymaking. Examples:
President okays Rajasthan labour reforms: Firms with 300 workers need no govt nod to sack (Nov 8 2014)
Labour law changes: MP follows Rajasthan, takes ordinance route (Nov 15 2014)
Elsewhere, the unions whine:
CITU denounces 'anti labour' amendments in Rajasthan labour law
Therefore, change is happening. It's just not happening topdown, and those looking at the center to pass edicts are missing out on the change that's actually happening.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Theo_Fidel » 07 Feb 2015 00:20

I would not necessarily call all Indian labor laws archaic. They are actually similar to what advanced societies have on their books from Japan to EU to NA, etc. Some silly, some good, most well intentioned. It’s just that at this stage of Indian development we cannot afford them. It takes an incredible amount of overhead in staffing and effort to implement these complex laws and this acts as a competitive disadvantage at this moment in our economy. Things are similar in pollution, food production, education, tax laws etc. For industrialization to occur we must be careful with first world level controls for a short period till we get lift off, say to the $12,000 per capita level then we can start phasing in these tight controls on our companies.

As it is we don’t get these advanced laws implemented and all folks are left with is bribery and harassment of company officials….
---------------------------------------

BTW I don't think this is a function of being over optimistic.

Simple growth rate of 6% plus the inflation rate of 4% gives us a direct rate of expansion in dollar terms of 10%.

Plugging in the numbers $2 Trillion GDP grows to ~ $ 10 Trillion in 2030 dollars.

Theo_Fidel

Re: Indian Economy - News & Discussion Oct 12 2013

Postby Theo_Fidel » 07 Feb 2015 02:22

One more data point for those who think this growth cannot happen quickly.

(June 2011) Electricity Generation Capacity : 176,990 MW
(November 2014) Electricity Generation Capacity : 255,012 MW

Time period 3 years 5 months. Capacity added : 78,022 MW !

78,022/41 months ~ 2,000 MW of capacity added per month.
We were adding a 500 MW power plant every week.
And it wasn’t really that much of a strain on our system.

Just at this rate, without any acceleration, we will add ~ 400,000 MW of capacity by 2030. Which is a low end estimate IMHO.

http://www.cea.nic.in/reports/monthly/i ... /jun11.pdf
http://www.cea.nic.in/reports/monthly/i ... /nov14.pdf

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 07 Feb 2015 04:00

PM Modi conducted his planned meeting with NITI Aayog on schedule:
Modi talks economic revival with experts
As global oil prices drop below $50 a barrel, creating a favourable economic outlook and a base for further fuel subsidy reforms, Prime Minister Narendra Modi wants measures to take advantage of this environment.

Besides oil, rising labour costs in China is in India's favour, as it raises our attractiveness for foreign companies which are keen to set up manufacturing units.

Modi attended a meeting on Friday with eminent economists and others in his first visit to the newly created NITI Aayog - he is its chairman. He sought views on four major areas of concern - the general economic scenario, methods to bring back fiscal prudence, steps to boost revenue and to rationalise spending. The need for a stable tax regime was also discussed. All aimed at putting India on a high-growth path.

The economists and experts included prominent names such as Vijay Kelkar, Nitin Desai, Bimal Jalan, Rajiv Lall, R Vaidyanathan, Subir Gokarn, Parthasarathi Shome, P Balakrishnan, Rajiv Kumar, Ashok Gulati, Mukesh Butani and G N Bajpai. NITI Aayog Vice-Chairman Arvind Panagariya was present, as were the two full-time members, Bibek Debroy and V K Saraswat.

NITI Aayog, facilitator for the meeting, will collate the suggestions and send it to the finance ministry for incorporation in the Budget for 2015-16, slated to be presented in the Lok Sabha on February 28. Finance Minister Arun Jaitley conducted the meeting.

Every year, in February, the government reports an advance estimate (AE) on the years GDP. A revised estimate is then reported in May, 2 months after the fiscal ends. A final estimate is then reported in October. The AE for this fiscal will be reported on Monday, along with GDP data for Q3 (Oct-Dec 2014).
Moody's analysts expect India's economy to grow at 3-year high of 6% in Q3
Moody’s Analytics, a research firm of the Moody’s group, on Friday projected India’s economy to grow by six per cent in the October-December period of 2014-15. Official data for the quarter is to be released on Monday.

“An upturn in fixed investment should drive better GDP (gross domestic product) growth,” Moody’s Analytics said.

If the rate of growth in the quarter is six per cent, it will be the highest since the December quarter of 2011-12 — a three-year high.

Moody’s estimates are based on the older definition of gross domestic product (GDP) and 2004-05 as the base year. After some recent changes in calculation methodology, 2011-12 has now been set as the new base year and GDP, unlike the earlier method, includes indirect taxes net of subsidies.

On Monday, the government will release advance estimates for 2014-15, as well as for the first three quarters of the current financial year — on the basis of the revised methodology.

Govt may approve new SEZs, extend existing ones
The government is likely to approve some new proposals for special economic zones (SEZs) and extend the approvals for old ones, when the Board of Approvals (BoA) on SEZs meets on February 20. This is expected to boost investments and production in these tax-free enclaves.

SEZ activity in the country has slowed substantially, with the introduction of minimum alternate tax (MAT) and dividend distribution tax. It is expected that in the coming Budget, to be unveiled by finance minister Arun Jaitley on February 28, the rate of MAT might be reduced to 7.5 per cent from the 18.5 per cent at present.

Last month, the government had relaxed a set of norms for the zones that allowed developers to carry out infrastructure-related work within the tax-free enclaves such as building of banks, hospitals, hotels, schools and colleges that can be even used by people residing outside, as well as by the workers and families staying within.

The total number of SEZs with formal approval came down to 491 in December from 558 in October due to cancellation of projects. Out of the 491 projects, 352 have been notified. A total of 196 SEZs are presently operational and are exporting.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Frederic » 07 Feb 2015 04:50

Suraj, yes.

I am following the "Rajasthan Experiment" in labour laws with interest. As an "incubator" for the labour law reforms, it is a very shrewd and a "deep game" move my Team Modi.

Do you think GST would fit this bill too or do you think GST needs to be centrally mandated?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Frederic » 07 Feb 2015 04:53

The economists and experts included prominent names such as Vijay Kelkar, Nitin Desai, Bimal Jalan, Rajiv Lall, R Vaidyanathan, Subir Gokarn, Parthasarathi Shome, P Balakrishnan, Rajiv Kumar, Ashok Gulati, Mukesh Butani and G N Bajpai. NITI Aayog Vice-Chairman Arvind Panagariya was present, as were the two full-time members, Bibek Debroy and V K Saraswat.


Just the names in that roster warms the cockles of a Jingo.

As opposed to the snake oil peddlers like Jean Dreaze in that odious body NAC!

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 07 Feb 2015 05:26

Frederic wrote:Suraj, yes.I am following the "Rajasthan Experiment" in labour laws with interest. As an "incubator" for the labour law reforms, it is a very shrewd and a "deep game" move my Team Modi.

Yes this is a very Chinese approach. They used such laboratories to implement policies in the real world in a limited area and finetune it, before expanding them nationwide.
Frederic wrote:Do you think GST would fit this bill too or do you think GST needs to be centrally mandated?

GST involves inter state commerce taxation reform. Can't be done just at state level. Plus the state power to tax comes from the federal constitution, so the center has to lead the task of changing the constitution via the GST amendment.

For those interested: The complete guide to understanding India's biggest ever tax reform: the GST

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby gakakkad » 07 Feb 2015 07:30

10 T at 2030 would be the lower end of the projection...might reach 10 by 2025..at 15% CAGR we ll be pretty close to 10t by 2025...

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_22733 » 07 Feb 2015 08:21

Doesn't that also depend on exchange rate of dollah?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 07 Feb 2015 08:28

These computations assume stable exchange rates. Such a growth in the size of the economy would normally pressure the Rupee to strengthen.

It is deceptively hard to maintain 6-8% growth and price stability for an extended period of time. It requires a continuous process of reform and effective administrative implementation. Most of our 2000s boom came on the back of ~3-4 years of good policymaking, but ran aground spectacularly as the poor policies of the latter half of the 2000s bit. Five years of continuous strong policymaking will generate at least 2-3 years of further tailwind of growth, and if the NDA administration wins again in 2019, then yes there's a good chance they'll accomplish the $10 trillion by mid 2020s goal.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Prem » 07 Feb 2015 09:47

Suraj wrote:TFive years of continuous strong policymaking will generate at least 2-3 years of further tailwind of growth, and if the NDA administration wins again in 2019, then yes there's a good chance they'll accomplish the $10 trillion by mid 2020s goal.


Ya Allah !!
I think it will be by 2024-2025 unless INR appreciate to 45 as it was Char Saal Pehle.
One mystery is our FC reserves are not growing even after Crude price drop and lesser import of gold.
Are we importing more and more of Capital goods, machinery etc ?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Singha » 07 Feb 2015 09:56

R Vaidyanathan has been a occasional poster in br in the past. strong nationalist pov. username rvaidya.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Prasad » 07 Feb 2015 12:43

He's very active on Twitter these days.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 07 Feb 2015 13:28

Prasad, if you're on there too, please encourage him to post here too. It would be a coup to have a NITI Aayog member posting here again, even exceptionally infrequently.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Yagnasri » 07 Feb 2015 14:28

I have read Debroy 10 part article on Indian Railways. Exceptionally good on and with clear clearity on basic issues like cleanliness of stations , trains etc to security, privatisation, goods trains etc. He seems to be in the committee on railways.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby nawabs » 07 Feb 2015 15:57

Inter-state panel to boost infra may be set up on Sunday

http://www.business-standard.com/articl ... 731_1.html
Prime Minister Narendra Modi is expected to announce an inter-state committee of secretaries to monitor major infrastructure projects at the first meeting of the NITI Aayog governing council on Sunday. He will seek inputs from them on labour reforms. The PM is also likely to lay down the road map on transfer of central funds to state governments after the disbanding of the Planning Commission and cut down the number of Centre-sponsored schemes, from 66 to 15 or 16.

The schemes are expected to cover broad areas and reflect the priorities of the Modi-led government. He is also expected to dwell on measures to eliminate poverty. All chief ministers, except Mamata Banerjee, are expected to participate in the day-long meeting, along with vice-chairman of NITI Aayog Arvind Panagariya, members Bibek Debroy and V K Saraswat and finance, agriculture, home and railway ministers.

Officials said according to the agenda of the meeting, Modi is expected to seek views from the chief ministers on the national priorities for the central government. The 12th Five-Year Plan might be allowed to run as it is, with a changed focus and scrapped thereafter, a senior official said. The role that state governments will play in the execution of Modi’s pet projects will be spelt out in the meeting.

In the case of schemes like Namamee Gange (cleaning and rejuvenation of River Ganga), officials said the Centre might propose including cleaning of rivers others than the Ganges into the scheme to enlist the state governments.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Singha » 08 Feb 2015 03:58

How Ikea is ramping up work in India
http://economictimes.indiatimes.com/ind ... 157467.cms


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