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Indian Economy News & Discussion - Aug 26 2015

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vijayk
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Re: Indian Economy News & Discussion - Aug 26 2015

Postby vijayk » 05 Oct 2017 18:47

Deleted
Last edited by Suraj on 05 Oct 2017 19:45, edited 1 time in total.
Reason: cleanup

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby achoudhury » 05 Oct 2017 19:03

Modi's put out a robust defence of Indian Economy and demonstrating conclusively that not all is doom and gloom as it was being made out to be and things are actually looking up from now on. Last quarter Import grew much faster than Export and dragged the GDP by 0.6%, but now that exports are rising again, this imbalance will be taken care of as well. But what is inescapable is that India can not be in 8% trajectory till the bad loans ( courtesy prev Conress govt's rampant loot and plunder) issue is sorted out. NaMo needs to show some political courage now in this area. Gadkari has done exemplary work in this area for Road sector but NPA issue is humongous and will remain a drag till it is sorted out. In fact, lot of arrows needs to be fired on a case by case basis. Bank Consolidation, Re-Capitalization, Debt Retirement, Debt Restructuring, Enforcing Bankruptcy provisions, Anti Dumping Duty all of them needs to be fired before Private Investment will pick. India can not grow on FDI alone. Another are to concentrate will be Real Estate Sector , which is down in dumps.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby arshyam » 05 Oct 2017 19:07

Supratik wrote:If you are talking about HDI then TN is better.
As you can see in my reply, I was only talking about public transport. vina saar made some points about HDI, etc., on which I have no comment.

Supratik wrote:I believe the ORR is still incomplete. Hyd I believe started later and finished it.
Beliefs are easily verified by a simple web search.

Hyderabad (Don't get me wrong, it's an excellent road that is built for the next 20 years' demand.)
The construction started in December 2005. It is completed in a phased manner by June 2016 after delays. But Work is still pending on Kandlakoya gap on NH44 junction at Medchal which is delayed due to court case.

Chennai bypass
The first phase is 19 km (12 mi) six lane fully access controlled carriageway from Perungalathur on the Grand Southern Trunk Road (NH 45) to Maduravoyal which lies on the Chennai - Bangalore NH-4. A 3-tier trumpet interchange has also been constructed at the starting point at Irumbuliyur. It was inaugurated in April 2008.
{Overall project} Completed in 2010
(No nice summary on the page, unfortunately)

Chennai ORR
On 29 August 2010, the then Tamil Nadu Deputy Chief Minister M. K. Stalin laid the foundation for the first phase of the project from Vandalur to Nemilichery covering a distance of 30 kilometres (19 mi).
Phase I of this project was implemented by GMR, and the project was originally expected to be completed by June 2012. Phase I was thrown open to the public on 29 August 2014,
Phase II is under construction, but going by the timelines, does not seem to qualify for "perpetually under implementation". Again, this is the 3rd ring road around the city.

Supratik wrote:but the idea that nothing is happening in NI is frog in well syndrome.
Where did I say anything of the sort?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby arshyam » 05 Oct 2017 19:21

kiranA wrote:I think AP is even better than TN is providing better built buses and generaly cleaner environments. But it doesnt matter. Road transport is managed by state governments. And is generally excellent in southern states.
Agreed. TN hasn't invested in its public transport of late, thanks to its focus in the last ten years on becoming a nanny state and supplying TVs, wet grinders, mixers, as well as idlis to its population. So the gap is indeed narrowing.

kiranA wrote: There is another darker reason for this. Rail transport which is managed by central is shambles and completely biased towards nothern india starting from punjab ...then across the gangetic plain and ending in bengal. This forced peninsular india to invest in road transport and all the southers state bleed in revenues due to this as every road transport corporation is in losses. So not only do they dont get rail investments they undergo further losses to subsidize road transport . All this in addition to higher taxes these regions pay per capita to delhi's kitty. The theft of the south to benefit north.
But this is not true, at least as far as TN, AP/TS and KL go. Sure, there are no 130kmph lines in the region, but from a connectivity PoV, there are plenty of reliable rail services within and across these states. Sure, demand outstrips supply, but that's no different from elsewhere on IR.

If anything, it is the current GoI that has aggressively pushed for adding rail infra. The Chennai-Mumbai rail line, a significant portion of which goes through the Rayalaseema area of AP is now doubled all the way to Wadi. So is the line from there to Hyderabad. A third track is coming up on the busy Warangal-Vijayawada route. As if that's not enough, the entire east coast line through AP will get another track (Visakhapatnam - Gudur). KA is getting a slew of similar investments - BLR - Guntakal (connecting to the Chennai-Mumbai line), BLR-Hubli doubling, BLR-Mysore doubling got completed recently, etc. Same goes for TN - Chennai - Madurai doubled+electrified, quad and triple lines in all directions out of Chennai, Tiruchi-Thanjavur double line, and so on. Konkan railway doubling has started, and the biggest beneficiary will be KL. And so on.

How is this "biased" toward <fill in the blanks>?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 05 Oct 2017 19:52

MOD NOTE

This thread is going to be actively moderated until posters behave. There's been a tendency on the part of posters to use this as a new politics thread. Doing so will get you warned, or banned, for repeated offenses. The posts themselves will be deleted.

If you post here to make an argument, back it up with reference material. Or don't post. Long rhetorical diatribes will be summarily deleted.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby ShauryaT » 05 Oct 2017 20:45

My thoughts are well captured in the article below. Pasting in full as a response to PM Modi's selective articulation, which is fine but failed to address the key issues.

Narendra Modi speech: PM’s data is impressive but it’s selective and fails to answer tough questions

It was a speech impressive enough to connect with both the urban middle class and the poor in India’s villages. It wasn’t typical of Prime Minister Narendra Modi though. There was number crunching and some serious data analysis at his speech on Wednesday during the inauguration of the Golden Jubilee Year of the Institute of Company Secretaries in New Delhi. Why such a closed captive audience? He should do a press conference and be subject to scrutiny and questions. A one was communication is propaganda not in tune with the democratic process. He had certainly done his homework before launching his massive defence of the economy and counter-attacking its critics.

Modi began the speech saying he is not an economist. But, what followed indeed sounded like coming from one -- nothing short of an economist's presentation packed with selective data that was essentially meant to prove that a faltering economy under his rule today is still better than the UPA days and achhhe din is still a possibility ahead.

Modi called his critics (both within the BJP camp and outside) of the economy as ‘pessimists who spread despair’ and likened them to Shalya, the character in Mahabharata who demoralised Karna despite being his charioteer on the Kaurava side. I think the Shalya comment was meant as persons tricked into supporting the opposition. I do not agree, but let this part slide or it will be name slugging. Remember, Modi’s big attack on critics comes shortly after senior BJP leaders and former union ministers, Yashwant Sinha, Arun Shourie and Subramanian Swamy flayed the government’s mismanagement of the economy, particularly policies such as demonetisation and the flawed rollout of goods and services tax (GST) as contributing factors for the current economic mess.

On Wednesday, the Reserve Bank of India (RBI) too acknowledged the state of the economy lowering the gross value added (GVA) forecast to 6.7 percent from 7.3 percent earlier and warned the government that it needs to act urgently on certain areas to bring back economic momentum.

Modi and his team are not too fond of their critics. After Yashwant Sinha’s criticism, Union Finance Minister Arun Jaitley had retorted calling him ‘a job applicant at 80’ which was then followed with a personal attack and triggered a wider debate.

In his speech, Modi, however, acknowledged that there is indeed a slowdown in the economy and his government is aware of it. Necessary steps will be taken to bring the economy back on track, Modi seemed to promise. This is a good sign since this is the first time any top minister in this government is acknowledging there is a problem in the economy.

While the PM coming out of denial mode on the state of the economy is a good signal, there are a few questions that he needs to answer on some of the claims he has made. Fact checks are in order.

One, Modi didn’t speak of a painful dip in private investments in the country during his term. One of the questions he needs to answer is that even after three-and-half years of his rule, why hasn't his government succeeded in generating enough momentum to get the private sector to put money on the table? Private investments are the lowest in several years, and the onus has been on the government to save growth.

On Wednesday, in an interview to CNBC-TV18, Mahesh Vyas, MD & CEO of the Centre for Monitoring Indian Economy, said new project announcements have declined sharply with the private sector investment proposals at their 15-quarter low. “The results for the September 2017 quarter have been very depressing. We have seen only around Rs 845 billion worth of new investments being proposed and we used to get at least Rs 1.5 trillion worth of new investment proposals and in better times, we used to see more than Rs 2 trillion worth of new investments,” Vyas said (watch the interview here).

Second, Modi didn’t speak on the serious problem of not enough jobs being created for millions of new entrants. According to the government’s own data presented in Parliament, overall unemployment was rising in India with the highest rate being among the other backward classes (OBCs). While the overall unemployment rate marginally increased to 5 percent now from 4.9 percent in 2013 for the scheduled castes, the unemployment rate was 3.1 percent in 2011, which has now risen to 5 percent (read a report here). Many experts, including former RBI governor Raghuram Rajan, have cautioned the government that the inability to accommodate new workers could emerge as the most serious concern for the economy going ahead. Despite its various schemes, this government has clearly failed to generate enough jobs for millions of new aspirants. Why was Modi, who promised achhe din to the country, silent on this issue in his speech?

Third, Modi also talked about an improvement in fiscal deficit and made a comparison of a period of high-growth-high-inflation during UPA days vs low-growth-low-inflation in his term to establish that macro-economic indicators are more sustainable now. He is right, fiscal deficit has indeed come down. That, however, is hardly an achievement of the government’s smart policies but is mainly because crude oil prices have more than halved from its peaks and this has benefited by bringing down the import bill. As for high inflation, a period of high growth was bound to have price pressures accompanying it as former RBI governors have elaborated. The credit for low inflation goes to the RBI I think GoI also gets credit partly for controlling fiscal deficit. for consistently staying on a retail-inflation targeted policy stance by keeping rates on hold for a prolonged period. However, food inflation continues to be high hurting the common man.

Fourth, Modi also took on critics for blaming the government for just one quarter of low GDP growth (5.7 percent in June) and made a comparison of the UPA years when GDP had fallen below that level. That isn’t entirely correct. Growth has been falling for at least five quarters now and the problem in the economy is more structural than due to one-off factors. Both demonetisation and GST have only added to the pain. But one shouldn’t miss that these elements didn’t actually trigger the current phase of slowdown. Moreover, most of the growth has come from government spending in the January-March and April-June quarters. If one deducts this component, the growth is even lower. Also, it isn’t fair to compare GDP numbers of these two periods as the methodology has changed causing a spike in the growth figures.

Fifth, Modi was largely silent on the banking sector mess. Though he can blame the UPA government for not acting to prevent the build-up of non-performing assets (NPAs), there are no excuses for acting too late to address the problem of bad loans and bank recapitalisation. The NPA scenario has only escalated in the last three years posing a big question mark to the government which controls 70 percent of the assets in the banking industry through state-run banks. Re-capitalisation of these banks continues to be a challenge and the government has not yet come with a convincing plan to address this issue. As a result of the huge NPA pile, bank lending to industries has come to a grinding halt. Though government schemes such as Mudra has helped to assist micro and small enterprises, the broader flow of credit to industries has actually contracted and is at multi-year lows.

Sixth, Modi claimed demonetisation has succeeded in its goals. But neither he nor his government machinery has managed to come with convincing evidence to show that the three originally stated goals of demonetisation — curbing black money generation, fake currency circulation and terror financing — have been achieved yet. With almost all the demonetised currency coming back into the banking system, there is a possibility that much of the black money in cash too have found its way here. It is a a mammoth task for the taxman to dig out the bad money from the good as the government risks the possibility of harassment of the honest taxpayer. On the negative side, demonetisation has hit the informal sector hard and the small entrepreneurs who are the backbone of India’s informal economy. Costs have, so far, outweighed the gains by a significant margin regardless of the talk of future gains such as cashless economy and increase in tax base. Modi would have done well to acknowledge this.

Seventh, Modi spoke about India emerging out of the ‘fragile five’ group with a much stronger economy. He is right. But, is India staying that way? Exports aren’t doing well and non-oil imports are increasing to meet domestic needs. The trends are disturbing. While even the world economy is improving, India continues to lag behind in the recovery process, wrote Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management in a column Times of India. “It is disappointing that India is missing out on the global revival in economic growth, but perhaps even more troubling that it is missing out on jobs growth – a trend that precedes the GDP slowdown but has also gotten worse over the past year,” Sharma says.

Painting economic critics as frustrated job aspirants and pessimists (in the club of Shalya) is fine, but Modi would do well to look at the merits of the criticism and ascertain where it is going wrong in the larger interest of the economy before discarding the criticism. Some time back, former RBI governor Raghuram Rajan faced a barrage of criticism for saying India is like a one-eyed man in the land of the blind. But fresh signals show that India may even miss out the global growth march if it doesn’t acknowledge serious problems in the economy and takes a corrective course of action. Critics may have personal and political intentions, but the problems on the ground are real. Modi and his team should take note.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Hari Seldon » 05 Oct 2017 21:18

>> sonia singh‏Verified account
@soniandtv
Breaking on #ndtv9, major review likely in GST rules, monthly returns could be made quarterly, rate reduction in some sectors likely

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Rampy » 05 Oct 2017 21:43

ShauryaT wrote:My thoughts are well captured in the article below. Pasting in full as a response to PM Modi's selective articulation, which is fine but failed to address the key issues.


Fourth, Modi also took on critics for blaming the government for just one quarter of low GDP growth (5.7 percent in June) and made a comparison of the UPA years when GDP had fallen below that level. That isn’t entirely correct. Growth has been falling for at least five quarters now and the problem in the economy is more structural than due to one-off factors. Both demonetisation and GST have only added to the pain. But one shouldn’t miss that these elements didn’t actually trigger the current phase of slowdown. Moreover, most of the growth has come from government spending in the January-March and April-June quarters. If one deducts this component, the growth is even lower. Also, it isn’t fair to compare GDP numbers of these two periods as the methodology has changed causing a spike in the growth figures.

Fifth, Modi was largely silent on the banking sector mess. Though he can blame the UPA government for not acting to prevent the build-up of non-performing assets (NPAs), there are no excuses for acting too late to address the problem of bad loans and bank recapitalisation. The NPA scenario has only escalated in the last three years posing a big question mark to the government which controls 70 percent of the assets in the banking industry through state-run banks. Re-capitalisation of these banks continues to be a challenge and the government has not yet come with a convincing plan to address this issue. As a result of the huge NPA pile, bank lending to industries has come to a grinding halt. Though government schemes such as Mudra has helped to assist micro and small enterprises, the broader flow of credit to industries has actually contracted and is at multi-year lows.

Sixth, Modi claimed demonetisation has succeeded in its goals. But neither he nor his government machinery has managed to come with convincing evidence to show that the three originally stated goals of demonetisation — curbing black money generation, fake currency circulation and terror financing — have been achieved yet. With almost all the demonetised currency coming back into the banking system, there is a possibility that much of the black money in cash too have found its way here. It is a a mammoth task for the taxman to dig out the bad money from the good as the government risks the possibility of harassment of the honest taxpayer. On the negative side, demonetisation has hit the informal sector hard and the small entrepreneurs who are the backbone of India’s informal economy. Costs have, so far, outweighed the gains by a significant margin regardless of the talk of future gains such as cashless economy and increase in tax base. Modi would have done well to acknowledge this.


I am not an economic but about article itself seems to be selective in his overall thinking point 4-6 he agrees that Demo and NPA caused the problem which clearly tells us how our economy was run in last 40 years, so what should Modi do let the thugs and thieves run the show so Economy can boom? on NPA the numbers are staggering and i agree banking sector reform is important but we know how long it will take for us to bounce back and how much planning is needed and how many bad apples we have to take out before we reform is done
Its easy to point a finger but performance is always comparative and bench mark we have is UPA regime no?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby hanumadu » 05 Oct 2017 23:05

ShauryaT wrote:My thoughts are well captured in the article below. Pasting in full as a response to PM Modi's selective articulation, which is fine but failed to address the key issues.

Narendra Modi speech: PM’s data is impressive but it’s selective and fails to answer tough questions


Fifth, Modi was largely silent on the banking sector mess. Though he can blame the UPA government for not acting to prevent the build-up of non-performing assets (NPAs), there are no excuses for acting too late to address the problem of bad loans and bank recapitalisation. The NPA scenario has only escalated in the last three years posing a big question mark to the government which controls 70 percent of the assets in the banking industry through state-run banks. Re-capitalisation of these banks continues to be a challenge and the government has not yet come with a convincing plan to address this issue. As a result of the huge NPA pile, bank lending to industries has come to a grinding halt. Though government schemes such as Mudra has helped to assist micro and small enterprises, the broader flow of credit to industries has actually contracted and is at multi-year lows.
[/b]


NPAs are the root cause of our economic problems. All other problems are directly tied to it. Lack of private investment? All companies are already highly leveraged, debt ridden and not generating profits. So where will private investment come from?

This recapitalizing banks is load of poppy cock. Recapitalizing banks will not solve the problem unless it goes hand in hand with taking the debts off the hands of the industries. Basically, a debt write off. There are people who prefer this approach but there are people who along with Modi prefer the short term pain for long term stability. The world tried the first approach after the global melt down. India is trying the second approach.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Supratik » 05 Oct 2017 23:40

arshyam,

My comment was in response to vina not yours. During my travels I did not find TN to be more prosperous or having better infra than PJ, HY. I am not talking about Delhi-NCR which is even better. Countryside did not look superior to even AP. The first thing that struck me was how even the modern areas in Chennai, Hyd were unplanned as compared to even many small relatively poorer cities in the north. My source of info for infra is SSC, youtube and google. ORR comparison is from conceptualization and completion. Hyd has done it fast. If the comparison is with eastern UP, BH and WB minus Kolkata which are the poorest parts of India then the bragging is to be laughed at.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Supratik » 05 Oct 2017 23:53

There is going to be no debt write off. The system has been changed under Modi govt. That is the Bankruptcy law. So the companies will go under the regulatory authority which is going to decide whether to sell, get strategic investor, liquidate assets, etc. The days of Vijay Mallya type of business are over.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby vijayk » 06 Oct 2017 00:02

NPAs have 2 solutions:

1. GO aggressively against defaulters, take over assets/sell them off. Jail them.
2. Write off or buy off all bad loans and sell bonds (Quantitative easing the way US did after 2008 crisis).

(1) affects GDP/Growth and total bust of economy
(2) Writing off loans is a Political death in India.

If this could be solved, RR should have/could have solved. No one has any answers to it. It is only political weapon in the hands of our Brown British against Modi and accuse him of Ambani/Adani.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby chetak » 06 Oct 2017 00:09

Supratik wrote:There is going to be no debt write off. The system has been changed under Modi govt. That is the Bankruptcy law. So the companies will go under the regulatory authority which is going to decide whether to sell, get strategic investor, liquidate assets, etc. The days of Vijay Mallya type of business are over.


and there should be no loan write offs.

If someone cannot run his business or is stuck in a downturn due to global headwinds, whatever then let them wind up and go home after selling off assets, repaying the loans and leaving behind a clean slate. If they are in the wrong business or a business where they could not read the signs for whatever reason, take the hit and go home.

Either start up again or blow your brains out. Either way, get the greedy snout out and away from the public trough.

There is no earthly reason for the Indian taxpayer to be stuck with the tab just because some hot shot owner type messed up.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 06 Oct 2017 01:15

kiranA wrote:There is another darker reason for this. Rail transport which is managed by central is shambles and completely biased towards nothern india starting from punjab ...then across the gangetic plain and ending in bengal. This forced peninsular india to invest in road transport and all the southers state bleed in revenues due to this as every road transport corporation is in losses. So not only do they dont get rail investments they undergo further losses to subsidize road transport . All this in addition to higher taxes these regions pay per capita to delhi's kitty. The theft of the south to benefit north.


Here is the 2017-18 Railways plan.
You may need a map (http://www.indianrailways.gov.in/railwa ... ap_Eng.pdf (PDF))
to help interpret the numbers.

Code: Select all


2017-18 Railway Pink Books
PDF files, very slow to download
All numbers in crores, rounded to one decimal place.
http://www.indianrailways.gov.in/railwayboard/view_section.jsp?lang=0&id=0,1,304,366,539,1809
Zone                 New Construction   Gauge Conversion   Doubling
Central               889.0               0.0               78.0
East Central         1052.0             205.0               78.1
East Coast            559.5               0.1              389.7
Eastern               306.3              15.0               91.4
North Central          11.0              86.1              111.0
North Eastern         273.0             149.1               64.0
North Western         122.1             334.1               45.9
Northeast Frontier   4657.5             588.5               23.0
Northern             1210.2               0.0               29.2
South Central         886.7               1.6              436.0
South East Central    101.0             517.0              328.7
South Eastern           7.0               3.1              152.4
South Western         331.8               5.0              309.6
Southern              303.3             429.7               94.7
West Central          501.0             259.7              118.4
Western               321.0             756.7               51.2

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby disha » 06 Oct 2017 02:21

GST filing going to quarterly basis will be bringing in line with large developed countries.

Sometimes it is better to have monthly filing so that input tax credits can be recovered early. However some businesses would want to justify the cost of monthly filings.

Having said that., RBI itself indicated that the economic growth will rebound to 7.7%. I am more optimistic. Particularly when one sees articles like this:

http://money.cnn.com/2017/10/04/news/economy/india-economy-modi-slowdown/index.html

The headline is
India's economy in 'downward spiral.' What did Modi get wrong?


Particularly when cow is brought in economy:

Beef and beer bans

Rising Hindu nationalism, stoked by Modi's right-wing party, is also hurting some parts of the economy.
In May, the government banned the sale of cows -- an animal considered sacred by the country's Hindu majority -- for slaughter, sending the meat industry into a frenzy.

While the ban was suspended by India's Supreme Court in July, the policy confusion has had a chilling effect. India exports vast quantities of buffalo meat. Those exports have declined this year, according to local media.

Cattle that once provided a vital source of additional income for millions of India's rural poor have now become liabilities because farmers fear they will be unable to sell them to the meat and leather industry, Guruswamy said.

Hindu nationalists have "completely unleashed a reign of terror as far as cattle are concerned," he added


When the CNN Money article has nothing to discuss beyond bank NPAs and devotes half of the article on beef and beer., it indicates that the economy is on a zoom path

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 06 Oct 2017 03:26

Bloomberg, 7 minutes audio available here.
https://www.bloomberg.com/news/audio/20 ... my-is-huge
Rana Gupta, Portfolio Manager, Manulife Asset Management Singapore, joined Juliette Saly and Doug Krizner to give his analysis of the latest RBI commentary. He went into the outlook for growth and teething troubles from the GST introduction. He went on to look at transformation in the informal economy.


Points I choose to highlight are: per Rana Gupta, aggregate demand remains strong, the slowdown is because of supply-side disruption. 50% of the economy is in the informal sector, and it is adjusting to the new normal with GST. Government should not have a fiscal stimulus, rather it should help the informal sector adapt to GST in whatever ways it can, so that the supply chains work with the new normal. He is bullish on India.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 06 Oct 2017 04:53

Indian services activity returns to growth in Sep on stronger demand: PMI
Services sector activity in India expanded for the first time in three months in September as it rebounded from GST-related contractions, driven by a surge in new business orders that supported job creation, a monthly survey said today.

The Nikkei India Services PMI Business Activity Index rose to 50.7 in September -- from 47.5 in August -- a reading that pointed to a slight pace of expansion.

Accordingly, the Nikkei India Composite PMI Output Index, which maps both manufacturing and services sectors, rose to 51.1 in September, from 49 in August.

"The Indian private sector regained some lost ground since the implementation of July's GST as service providers followed the manufacturing industry back to growth," said Aashna Dodhia, Economist at IHS Markit, and author of the report.

The improving economic environment supported job creation, with services employment increasing at the fastest rate in almost six-and-a-half years.

"The labour market was strengthened over the month as the pace of job creation quickened to the fastest since mid-2011, led by the transport and storage and consumer services sub- sectors," Dodhia said.

Shell companies crackdown: 450,000 directors may face axe
As many as 450,000 directors may face disqualification for their association with shell companies, Union minister P P Chaudhary said on Thursday as the government steps up its fight against the black money menace.

Asserting that genuine corporates will not face action, the minister of state for corporate affairs said non-compliant companies are tarnishing the image of good ones.

As the ministry pushes ahead with the efforts to weed out shell companies -- a term used for entities that have not been carrying out business for long and are allegedly used as conduit for illegal fund flows -- Chaudhary told PTI in an interview that the profile of all disqualified directors will be examined.

The ministry has struck off names of 2,17,239 companies from the records as on September 22 as these have not been carrying out business activities for a long period and have also defaulted on compulsory filings while more such firms are likely to face action.

"As on September 22, a total of 3,19,637 directors have been identified and flagged as disqualified under Section 164 (2) (a) of the Companies Act, 2013... It is estimated that the final list may touch the figure of about 450,000 (directors)," Chaudhary said.

RBI cuts SLR by 0.5%; frees Rs 57,000 cr for lending
The Reserve Bank of India today reduced the Statutory Liquidity Ratio (SLR), the portion of deposits held by banks in government securities, by 0.5 per cent to 19.5 per cent, freeing over Rs 57,000 crore to bank funds for lending.

According to bankers, it will not much of the difference as several banks are holding in excess of statutory requirement.

Following the announcement, stock of banks witnessed a surge on the stock market.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby ssundar » 06 Oct 2017 05:58

To me, the biggest two questions are:

1. When are we going to get solid metrics to measure ALL employment, including formal and informal as well as the entrepreneur count allegedly created by Mudra.

2. "Private Investment" technically includes FDI coming for "Make in India". What's happening with those? No news of big name investments since Foxconn many eons ago.


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Re: Indian Economy News & Discussion - Aug 26 2015

Postby JohnTitor » 06 Oct 2017 08:22

2 points I'd like to make.

On the NPA issue, the loans need to be written off from an accounting perspective. But the collections process needs to continue, including pushing the defaulters to bankruptcy and asset stripping of the firms. This is how we operate in the west. There is no empathy when it comes to loan recoveries. The accounting write off will allow the books to be cleaned and loans process restarted. But an additional measure that needs to be done is ensuring those involved should be penalised - either fire them or demote the. But I doubt this will ever happen in government banks

Second, if the rumour is true that jaitley will be shunted out, it might be a good thing.. Even better if swamy is brought in as the replacement. Having said that, replacing the FM at this juncture and not when other ministers were reshuffled suggests that Modis trust in jaitley was unfounded, by the same token the paid media (paid media, not me) will say that his faith that the economy will do well shortly is also unfounded.

If Modis can sort out the NPA process and lower GST rates/simplify the GST system, everything will be fine very quickly. But these are easier said than done because it involves people that he may not have control over such as baboons and CMs. The hardest part is the NPA issue which will require compliance from courts to push for bankruptcy / asset stripping.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby chandrasekaran » 06 Oct 2017 09:34

When did an article from the "revived to escape the crutches of law - national herald" become an authority on Modi's cabinet reshuffles ? Ignore the NH propaganda!

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby disha » 06 Oct 2017 09:52

ssundar wrote:To me, the biggest two questions are:

1. When are we going to get solid metrics to measure ALL employment, including formal and informal as well as the entrepreneur count allegedly created by Mudra.



How does it matter on when you will get "solid" metrics? Since any metric that will go against your thought pattern will not be solid enough. I can say this since you mention "allegedly created by Mudra".

I am actually surprised that after the UP victory the media started talking about the Ujwala scheme. Will that not be the case with MUDRA as well? Okay you can watch this two videos:



The above really helps the micro enterprise. Like your tailor or your barber or your fruit seller like above and spare parts/truck drivers like this below:



Or this https://www.youtube.com/watch?v=dxqpc7AfJCw

And if you are skeptical of the above., more power to you. You must find out the lacunae and let GOI know so that they can fix it.

2. "Private Investment" technically includes FDI coming for "Make in India". What's happening with those? No news of big name investments since Foxconn many eons ago.


Why does FDI have to do only with big names? Just go by the report from UN http://www.india.com/business/india-to-remain-among-top-fdi-destinations-until-2019-claims-un-report-2213391/

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby vina » 06 Oct 2017 10:50

JohnTitor wrote: The hardest part is the NPA issue which will require compliance from courts to push for bankruptcy / asset stripping.


The problem with the "Bankruptcy" stuff in India is that it wont work in India given the ownership structure of the banks. In any bankruptcy, the equity holders are wiped out, the debtors take a hair cut. In most bankruptcies, the assets are not enough to pay off the debtors.

This is where it gets problematic. Any hair cut taken by the banks will lead to screams of corruption and malfeasance will become a political issue. Next will come demands of you took a hair cut of X,000 crores for business, now why not for farmers, why not homeowners, why not "poor" 2 wheeler owners.

Fundamental problem is structural due to the nature of ownership of the banks. What is needed is PRIVATISATION (see what my handle says).

That word is NOT raised by MoDi. The SJM and other Marx( +/- Cow, doesnt matter) will be out in the streets. That needs political capital and a willingness to let go of a convenient vehicle to do dole/patronage politics (loan melas during the Indira days of Janardhan Poojari, the Indian Bank scam, etc etc..) and politically directed lending. No way any politico will do it. That is the problem. Rest is all nonsense and random Baboongiri

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Prasad » 06 Oct 2017 11:31

Tell me how you will privatise govt held banks without losing votes and I'm sure modi will do it :) What use is doing the right thing if you're not going to be re-elected?

Write-off and asset reconstruction itself is being touted as some scam by the con ecosystem. Soot boot sarkar comes from that. Let alone idiocies like adani is profiting from rafale deal. Even if you strike off the bad loans from bank balance sheets and "recapitalise" the issue of crony loans won't not resurface. Also, from the Mallya asset auctions we've seen that earlier valuations prior to loan grants were inordinately high (dabbu/lanjam/bribe/whatever) and so the values in your books are nowhere near realistic enough but what you will fetch, if at all, will be a pitiful % of whats on the books. So other than letting the bank die and close (there go your bank union votes and other) or writing off the money (hello congress shouting itself hoarse on modi being crony appeaser/scammer) there is no right way out.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby JohnTitor » 06 Oct 2017 13:51

^^ That's the point.

Someone needs to pay. Otherwise this issue will never be sorted.

Agree with Vina that any move will be shouted from the rooftops as corruption. But there is no way out.

One way to go about this nonsense India is in would be to sell all government banks but keep one, say SBI and use it to provide accounts and services to people across the country. Further, SBI should be restricted from providing loans to large businesses, and only businesses with turnovers less than 1crore should be allowed to request loans.

By doing this, privatisation can be pushed forward while also ensuring that the government can provide banking services to all the people, specifically poor.


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Re: Indian Economy News & Discussion - Aug 26 2015

Postby pankajs » 06 Oct 2017 15:22

GOI is not going to sell any PSU banks. And who will buy the banks with its bloated employee base and it's unions even if GOI gets all the NPAs off the banks balance sheet?

Instead the lending/borrowing can be pushed to the private banks by starving the worst PSU banks of further funds even while they are told to recover and cleanup their balance sheet. At the end these banks will either ship up or merge with other stronger PSU banks or die.

Same end result without the political fallout.
Last edited by pankajs on 06 Oct 2017 15:28, edited 1 time in total.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby vina » 06 Oct 2017 15:27

pankajs wrote:GOI is not going to sell any PSU banks. And who will buy the banks with its bloated employee base and it's unions even if GOI gets all the NPAs off the banks balance sheet?

Oh. The Unions and the Employees are the easiest. They can be let go by any private guy very easily. The true problem is that "phone call" directed lending and doles /patronage etc wont work anymore.

That is why it wont happen. Sell it lock stock and barrel and you will be surprised at the number of people lining up to buy the banks.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby pankajs » 06 Oct 2017 16:12

If it is so easy to let go of bank employees then the employees too must understand it. Why will GOI risk alienating them when the same result i.e. of moving banking business to private banks can be achieved by squeezing the PSU bank lending especially at the worst banks. Performance linked funding is a step in that direction.

Easier to implement with lesser opposition. Slower perhaps but equally effective.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby pankajs » 06 Oct 2017 16:47

I don't know what the future plans of GOI is but here is an interesting bit from Reserve Bank of India Deputy Governor Viral Acharya. BTW I found this only after I had written my previous post on the subject.

https://www.bloombergquint.com/business ... al-acharya
Reserve Bank of India Deputy Governor Viral Acharya said that the lack of an adequate recapitalisation plan is the Achilles heel of any effort to turn around state-run lenders grappling with mounting bad loans.

<snip>

Yet, the lack of a concrete recapitalisation plan for banks to deal with the aftermath of these various measures is an issue which makes him restless. “...how will they (banks) withstand the losses during resolution and yet have enough capital buffers to intermediate well the huge proportion of economy’s savings that they receive as deposits; can we end the Indian story differently from that of Japan and Europe?,” he asked.

Acharya pointed out that under-capitalised banks have capital only to survive, not to grow. The banks barely meeting the capital requirements will want to generate capital quickly, focusing on high-interest margins at the cost of high loan volumes. The resulting weak loan supply, and the low efficiency of financial intermediation, have created significant headwinds for economic activity, the RBI deputy governor pointed out.

The key takeaway for me is the line "Acharya pointed out that under-capitalised banks have capital only to survive, not to grow." i.e. fund the PSU banks enough to keep them alive but not help them grow.

Before anyone thinks I am only presenting one sided story let me pull out the following line form the above quote. "The resulting weak loan supply, and the low efficiency of financial intermediation, have created significant headwinds for economic activity." It is true that given that PSU banks constitute about 75% of the Indian banking scene such a policy might force overall lending down below what is required.

I don't know what is on Modi/GOi minds but let me offer a alternative of my own. What this will do is push lending/borrowing to private banks, capital markets, private equity, etc in a big way. I don't want to watch his video again but why do I feel that one slide in Modi's recent presentation was on capital market and one on private equity.

But again I am with Mr. Acharya in that if GOI is doing what I think it is doing it has to be very very careful else it will end up under funding growth. Transfer of banking business to private sector by squeezing the PSU banks is good but it must be done in a measured way and definitely not at the cost of growth.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby hanumadu » 06 Oct 2017 16:48

vina wrote:
JohnTitor wrote: The hardest part is the NPA issue which will require compliance from courts to push for bankruptcy / asset stripping.


The problem with the "Bankruptcy" stuff in India is that it wont work in India given the ownership structure of the banks. In any bankruptcy, the equity holders are wiped out, the debtors take a hair cut. In most bankruptcies, the assets are not enough to pay off the debtors.

This is where it gets problematic. Any hair cut taken by the banks will lead to screams of corruption and malfeasance will become a political issue. Next will come demands of you took a hair cut of X,000 crores for business, now why not for farmers, why not homeowners, why not "poor" 2 wheeler owners.


When the public sees promoters becoming paupers, they will only be too happy.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Aditya_V » 06 Oct 2017 16:49

For the Politican the worst thing is to let go off PSU bank, salaries are capped and people do business with Nationalised Banks since there are lesser charges involved for Savings accounts. But its Politicans huge leverage as to where these institutions can lend money.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 06 Oct 2017 17:18

http://energyinfrapost.com/first-india- ... expansion/
In A First, India Set To Overtake European Union In Renewable Energy Expansion
With the Modi government’s mega push for clean energy generation capacities, India is set to overtake the European Union in expansion of new renewable energy generation capacity for the first time, according to the International Energy Agency(IEA).

India’s move to address the financial health of its power utilities and tackle grid-integration issues drive a more optimistic forecast, the Paris-based agency said in its latest report Renewables2017. “By 2022, India renewable capacity will more than double. This growth is enough to overtake renewable expansion in the European Union for the first time,” the report said.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 06 Oct 2017 17:27

PM is addressing the nation at 9 PM.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby chetak » 06 Oct 2017 17:52

pankajs wrote:I don't know what the future plans of GOI is but here is an interesting bit from Reserve Bank of India Deputy Governor Viral Acharya. BTW I found this only after I had written my previous post on the subject.

https://www.bloombergquint.com/business ... al-acharya
Reserve Bank of India Deputy Governor Viral Acharya said that the lack of an adequate recapitalisation plan is the Achilles heel of any effort to turn around state-run lenders grappling with mounting bad loans.

<snip>

Yet, the lack of a concrete recapitalisation plan for banks to deal with the aftermath of these various measures is an issue which makes him restless. “...how will they (banks) withstand the losses during resolution and yet have enough capital buffers to intermediate well the huge proportion of economy’s savings that they receive as deposits; can we end the Indian story differently from that of Japan and Europe?,” he asked.

Acharya pointed out that under-capitalised banks have capital only to survive, not to grow. The banks barely meeting the capital requirements will want to generate capital quickly, focusing on high-interest margins at the cost of high loan volumes. The resulting weak loan supply, and the low efficiency of financial intermediation, have created significant headwinds for economic activity, the RBI deputy governor pointed out.

The key takeaway for me is the line "Acharya pointed out that under-capitalised banks have capital only to survive, not to grow." i.e. fund the PSU banks enough to keep them alive but not help them grow.

Before anyone thinks I am only presenting one sided story let me pull out the following line form the above quote. "The resulting weak loan supply, and the low efficiency of financial intermediation, have created significant headwinds for economic activity." It is true that given that PSU banks constitute about 75% of the Indian banking scene such a policy might force overall lending down below what is required.

I don't know what is on Modi/GOi minds but let me offer a alternative of my own. What this will do is push lending/borrowing to private banks, capital markets, private equity, etc in a big way. I don't want to watch his video again but why do I feel that one slide in Modi's recent presentation was on capital market and one on private equity.

But again I am with Mr. Acharya in that if GOI is doing what I think it is doing it has to be very very careful else it will end up under funding growth. Transfer of banking business to private sector by squeezing the PSU banks is good but it must be done in a measured way and definitely not at the cost of growth.


are we needlessly following the basel II norms even though it may not be appropriate for the Indian banking system??

also, we seem to be committed to implementing the basel III norms in due course.

why??

Important Points Regarding Implementation of Basel III

The government of India is scaling disinvesting their holdings in PSBs to 52 per cent.

The government will soon infuse Rs 6,990 crore in nine public sector banks including SBI, Bank of Baroda (BoB), Punjab National Bank (PNB) for enhancing their capital and meeting global risk norms.

This is the first tranche of capital infusion for which the government had allocated Rs 11,200 crore in the Budget for 2014-15.

The government has infused Rs 58,600 crore between 2011 to 2014 in the state-owned banks.

Finance Minister Arun Jaitley in the Budget speech had said that "to be in line with Basel-III norms there is a requirement to infuse Rs 2,40,000 crore as equity by 2018 in our banks. To meet this huge capital requirement we need to raise additional resources to fulfil this obligation.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 06 Oct 2017 18:04

Immediate need may be for some 50K cr.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby pankajs » 06 Oct 2017 18:13

chetak wrote:are we needlessly following the basel II norms even though it may not be appropriate for the Indian banking system??

also, we seem to be committed to implementing the basel III norms in due course.

why??
My guess is that we want to be in line with international norms with regards to our ability to withstand another GFC 2008 type crisis.

Some breathing space might be created by delaying the implementation by 2-3 years. That will also benefit the banks indirectly if the core sector is able to revive and thus make some loans currently classified as NPAs back into productive loans. Majority of the NPAs are linked to the core sectors.

http://www.thehindubusinessline.com/mon ... 740376.ece
India must develop own path to implement Basel-III norms: YV Reddy
In a recent meeting with the RBI, senior officials from the Finance Ministry pitched for deferring the implementation of Basel-III norms beyond March 2019, saying it will help banks meet the capital needs and increase credit flow to productive sectors along with balance sheet clean-up.

The global capital to risk norms, called Basel-III capital regulation, are being implemented in a phased manner by the Reserve Bank of India since April 1, 2013. They are to be fully implemented as on March 31, 2019.

According to the norms, banks have to maintain a minimum common equity ratio of 8 per cent and total capital ratio of 11.5 per cent by March 2019.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby chetak » 06 Oct 2017 18:23

pankajs wrote:
chetak wrote:are we needlessly following the basel II norms even though it may not be appropriate for the Indian banking system??

also, we seem to be committed to implementing the basel III norms in due course.

why??
My guess is that we want to be in line with international norms with regards to our ability to withstand another GFC 2008 type crisis.

Some breathing space might be created by delaying the implementation by 2-3 years. That will also benefit the banks indirectly if the core sector is able to revive and thus make some loans currently classified as NPAs current. Majority of the NPAs are linked to the core sectors.

http://www.thehindubusinessline.com/mon ... 740376.ece
India must develop own path to implement Basel-III norms: YV Reddy
In a recent meeting with the RBI, senior officials from the Finance Ministry pitched for deferring the implementation of Basel-III norms beyond March 2019, saying it will help banks meet the capital needs and increase credit flow to productive sectors along with balance sheet clean-up.

The global capital to risk norms, called Basel-III capital regulation, are being implemented in a phased manner by the Reserve Bank of India since April 1, 2013. They are to be fully implemented as on March 31, 2019.

According to the norms, banks have to maintain a minimum common equity ratio of 8 per cent and total capital ratio of 11.5 per cent by March 2019.


Why we don't really need Basel III

Why we don't really need Basel III

S. ADIKESAVAN

Basel III is meant to address the excesses of Western banks. It will hike borrowing costs in India and choke growth.

Basel I, Basel II, Basel II.5 and now, Basel III! Even as the global economy grapples with the problems of a persistent downturn and India's GDP is down for the eighth straight quarter, Indian banks may well have to gear themselves up for the implementation of the latest round of the Basel package.

The Reserve Bank of India has already circulated the draft guidelines for the implementation of Basel III norms, proposing a tighter timeline and higher capital adequacy norms than those adopted by the Basel Committee on Banking Supervision (BCBS) in December, 2010. The Indian standards are going to be stricter with respect to both the stipulated capital and leverage ratios and, the implementation period.

While the stipulated capital is higher by 1 per cent, and the leverage ratio by 2 per cent, the time-span for adoption has been shortened by two years. Will it be a case of ‘too much, too soon', an instance of being more loyal than the king? Should it be made applicable to all scheduled commercial banks? Will it stifle growth?

First, let us look at the context for the adoption of the Basel III reforms. It follows Basel II.5 which, for the first time, charged banks extra capital for the credit risk of what they hold in their trading portfolio.

The Basel III package seeks to address the lessons of the financial crisis in a post-2008 scenario, and aims at enhancing the banking sector's ability to absorb shocks arising from financial and economic stress. The background, obviously, is the sub-prime crisis in the US and the resultant fallout, which led to the collapse of leviathans like the Lehman's and the balance-sheet stress of Citi, Bank of America, RBS, et al.

Asia stood up quite resiliently to these developments. Like their counterparts in China, Japan, Hong Kong and Singapore, Indian banks too were largely unscathed, thanks to forward-looking counter-cyclical, macro-prudential national regulations, pioneered by the RBI under Dr. Y. V. Reddy. In fact, while liquidity dried up for Western banks then, it was a problem of plenty for Indian banks, with SBI itself receiving inflows of almost Rs. 1000 crore daily during January-February of 2009, in a flight to safety of NRI money. State Bank of India was seen globally as the “Safe” Bank of India!

FINANCIAL WMD

It is widely known that the problems arose in the West because of the widespread use of financial weapons of mass-destruction — Mortgage Backed Securities, Collateralised Debt Obligations and Credit Default Swaps. The bipartisan Levin-Coburn report of the US Senate, running into 629 pages, authored by Senator Carl Levin (Democrat) and Tom Coburn (Republican), April, 2011, has documented in detail the use of complex derivatives by US banks, and made 19 recommendations to prevent such crises in future.

A close reading of these19 recommendations of the report, titled Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, makes it clear that the crisis had very little to do with Basel norms or their inadequacies. The investigation found that the crisis was “the result of high risk, complex financial products, undisclosed conflicts of interest, and the failure of regulators to rein in the excesses of Wall Street”.

Complex financial products, which nobody understood, and light-touch regulation were the main reasons why Western banks were shaken to their foundations by the impact of the crisis. Regulators were asleep at the switch. In the UK, for instance, an audit by the Financial Services Authority would typically be done in less than an hour, according to colleagues who worked in the London offices of Indian banks.

The RBI is a more thorough-going regulator, and its CAMELS-based supervision of Indian banks has been largely effective in making sure that they function in a safe and sound manner. A typical Annual Financial Inspection (AFI) of an Indian bank would take approximately 45 to 60 days, being detailed both in its scope and coverage.

SAFETY MAINTAINED

Also, Indian banks have been traditionally dealing in plain-vanilla loans and advances, mainly the ubiquitous cash-credit and term loans. They don't deal in any of the derivatives that are the staple of the Western banks. Even in terms of operations at the branch level, what do Indian bank branches do? Mainly, direct housing loans, vehicle loans, cash-credits to industry, trade and business and term loans. Where is the complexity in all this?

Even the international operations of Indian banks are insignificant. Out of the 26 public sector banks in India, only three — SBI, Bank of Baroda and Bank of India — have any international operations worth the name. None of the foreign offices of Indian banks dabble in any derivatives/complex instruments. In foreign centres, the assets portfolio of Indian banks consists of mostly statutory investments, India-related trade credit (Buyers Credits and Suppliers' Credits or Bills discounted under LCs of Indian banks) and ECB loans of Indian corporates.

The systemic importance of Indian banks is another important parameter to be kept in mind while making Basel III applicable to them. The US Federal Reserve Board, for instance, in its proposal released in December, 2011, has announced that its new risk-based capital, leverage and liquidity requirements would be applicable only to banks with consolidated assets of US$ 50 billion (Rs 250,000 crores) or more. It is noteworthy that the Federal Reserve hasn't proposed adoption of the Basel III package in its entirety, even though it is a member of the BCBS).

Out of 48 Indian public and private sector banks, only seven had assets in excess of Rs. 250,000 crore, as at March, 2011; 23 had asset sizes of less than Rs. 75,000 crores ($ 15 billion). The Basel committee's move is to make the new Basel III rules applicable even to banks like Tamilnad Mercantile Bank (Assets of Rs. 16,117 crore), Lakshmi Vilas Bank (Rs 13,301 crore) and Catholic Syrian Bank (Rs 9829 crore).

DIFFERENT CONTEXTS

How perverse would it be to impose international norms drawn up in the aftermath of the “excesses” of the Western monoliths on small Indian banks engaged in straightforward, traditional banking? If New York Governor Arnold Schwarzenegger has migraine, should Mayor Sharadamma in Bangalore take any analgesic?

There are studies by the Organisation for Economic Co-operation and Development and the Institute of International Finance (the global bankers' body) which indicate that Basel III norms will lead to increase in borrowing costs and choke growth.

CRISIL has estimated that the Basel III norms would necessitate Indian banks raising Rs. 2,70,000 crore in capital during the next 5 years. That is an average of Rs. 55,000 crore every year. It is the public sector banks that would require most of the capital. It is a moot point how the Union Government will find the resources to fund this requirement of capital.

There definitely is a case for a very selective adoption of the Basel III norms by Indian banks, based on their asset size, systemic importance, complexity of operations and international linkages or similar parameters, looking to our own growth/stability needs. One size won't fit all. And Mumbai needn't sneeze each time New York catches a cold.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby vina » 06 Oct 2017 18:39

The GST is a god awful Mess. The Congress & Opposition are right when they say that the rates are ridiculous with too many slabs and stuff randomly put all over . India, infact has the HIGHEST GST rate at 28% (Denmark is the closest one I can find at 25%), and for certain goods with additional cess above the 28% it works to a whopping 40% . In comparison, the GST rates in S.E Asia is around 7% to 10% (Singapore, Thailand, Malaysia & Indonesia). Even in France & UK it is 10%. In the US, it is max of 10% sales tax in certain states (Kaliphornicashun and New York for e.g.).

Now, I simply CANNOT understand what the logic is in deciding what comes under 28% and what is 18% . It is all so random. I know the concept of "28%" was for "luxury" goods .

I just got the car back from service . I am typing out the itemised list and the GST from the bill I have in front of me.

1. Coolant 28%
2. Nut 28%
3. Bulb 28%
4. Plug Assembly, Oil Drain 28%
5. Cabin Air Filter 18%
6. Brake Fluid 28%
7. Fuel filter, Oil Filter and Air Filter 18%
8. Rust Protecter - 18%
9. Grease, Caliper Assemby - 28%
10. Windscreen Washer Fluid 28%
11 Engine Oil 18%

So, what the govt says is Engine Coolant, Nut, Bulb , Brake Fluid and Grease are "Luxury" and hence should be taxed at 28% , while Cabin Air Filter, Fuel Filter,Oil Filter, Air Filter, Rust protector and Engine Oil are "Essentials" and should be taxed at 18% !

How much more ridiculous can it get ? 28% tax on anything ? The Govt has just let some random dumb Baboons and Marx (Both Cow + & -) types run loose, with this "socialist" nonsense. How can you have high volume demand at 28% tax ? 28% on nuts and bulbs and brake fluid ? NUTS.

That said, this entire 18% stuff is WAY overboard. The appropriate rate of taxation would be around 14% for India.

I maintain what I wrote earlier. This Govt has INCREASED taxes, especially the indirect taxes all around and surreptitiously and people are getting a sticker shock. Demand WILL take a hit because of higher taxes and that is probably reflecting in the IIP numbers. At 28%, there seems to be EVERY incentive to avoid taxes, but then the trouble is , guys outside the GST will get cut out of the formal chains as the formal guys will insist on GST registration to get input credit or they will be paying presumptive input taxes (like I am having to do in imports).

Now I can understand why a huge section of trade are up in arms. And dont even get me started on the filing side, with ridiculous 3 forms to fill and monthly returns.

Only a Baboon like Huh-Schmuck who is absolutely clueless about anything beyond mindless Baboongiri and the others of their ilk could have dreamt up this nightmare. A classic case of Baboons putting their flea picking hands into something and trying to apply their "brains" and simply messing it up beyond belief.

They should have simply adopted something that worked and is proven somewhere else and taken it lock stock and barrel and brought it to India as is.

A_Gupta
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Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 06 Oct 2017 19:04

vina wrote:Now, I simply CANNOT understand what the logic is in deciding what comes under 28% and what is 18% . It is all so random. I know the concept of "28%" was for "luxury" goods .


Mostly what GST has done is made visible to you the previous invisible-to-you taxation structure.
Now that it is all clearly visible, it can be rationalized.


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