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Currency Demonetisation and Future course of Indian Economy

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nam
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Re: Currency Demonetisation and Future course of Indian Economy

Postby nam » 12 Oct 2017 01:21

My personal view is that it is very difficult to say what is happening in unorganized sector.. because.. well they are unorganized. No has the true numbers of how are employed and how many loss jobs in a normal annual cycle.

I read about losses in construction due to demo. How about jobs losses during the monsoon season which hugely effects construction .. of well anything?
This happens every year.

Katare
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Katare » 12 Oct 2017 01:45

Well, the problems with Indian economy are well understood -

Land, Labor and infrastructure.

Both UPA2 and NDA2 have chosen to focus on the third problem- Infrastructure in full gusto! Benefits of infrastructure would achieve full flow only if the other two, the land and he labor, are also reformed.

UPA booby trapped Land pretty good before leaving and Modi lost his nerve by pulling back his legislature on land reforms. This helped him win many state elections but this could come back to bite him in general election. Labor reforms were attempted but with only minor tweaks not with bold reforms that are needed. Privatization is mostly off the table and only disinvestment is being attempted.

It is easy for me to write all this and even whine about it but these are age old mega problems left over from Nehru/Indira era that every govt since than have faced but but all have been very careful in only using small scalpel to carve an elephant. It's been almost 40 years and we have not reached to the main body yet.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Rishirishi » 12 Oct 2017 03:17

Katare wrote:Well, the problems with Indian economy are well understood -

Land, Labor and infrastructure.

Both UPA2 and NDA2 have chosen to focus on the third problem- Infrastructure in full gusto! Benefits of infrastructure would achieve full flow only if the other two, the land and he labor, are also reformed.

UPA booby trapped Land pretty good before leaving and Modi lost his nerve by pulling back his legislature on land reforms. This helped him win many state elections but this could come back to bite him in general election. Labor reforms were attempted but with only minor tweaks not with bold reforms that are needed. Privatization is mostly off the table and only disinvestment is being attempted.

It is easy for me to write all this and even whine about it but these are age old mega problems left over from Nehru/Indira era that every govt since than have faced but but all have been very careful in only using small scalpel to carve an elephant. It's been almost 40 years and we have not reached to the main body yet.


I dont think privatisation or labour law is such a great deal. Most sectors now have to compete with private sector. Rail, coal and power distribution remains with GOI. I doubt if privatisation of Rail is such a great ide. No one has managed to building solid Railways by privatisation.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Kashi » 12 Oct 2017 05:39

Rishirishi wrote:No one has managed to building solid Railways by privatisation.


All Railway in Japan is privatised including the Shinkansen, though the system was conceived and set up during JNR, the publicly owned company. Nearly all local railways too are private, who own everything from rolling stock to tracks to stations.

On the other hand, railways in Britain are also under private ownership.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby yensoy » 12 Oct 2017 10:06

Rishirishi wrote:No one has managed to building solid Railways by privatisation.


I understand what you are trying to say. But on a side note, do you know which is the biggest example of a "solid Railway" built by privatization?

Our very own Indian Railways. These were built as crown monopolies - costs of their construction would be borne from funds raised internally, contributions from kingdoms and backstopped by the imperial government. Risks were borne by the imperial government too. Profits, of course, were sucked off to London. In that sense, they were private; and reflected the worst of the combination of colonialism and crony capitalism.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby nam » 12 Oct 2017 16:53

Katare wrote:Well, the problems with Indian economy are well understood -

Land, Labor and infrastructure.



I would say the problem is we don't produce anything worthwhile.

The same land, labor, infrastructure did not stop growth of IT. Bangalore has horrible infrastructure.

Companies are set up in Mumbai, rather than in some remote place,because of the existing ecosystem.It is probably the most expensive real estate in India. You can have multi floor manufacturing units if land is an issue.

Tatas have large manufacturing units, employing 100s of thousands.

Just like growth of IT triggered easier labour laws & education, infrastructure( office & transport) and demand for offices in most expensive places.

We need to produce something worthwhile. Something the world wants.. like Indian BPO & IT. Chinis do this very well.
Last edited by nam on 12 Oct 2017 17:54, edited 1 time in total.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby A_Gupta » 12 Oct 2017 17:38

yensoy wrote:
Rishirishi wrote:No one has managed to building solid Railways by privatisation.


I understand what you are trying to say. But on a side note, do you know which is the biggest example of a "solid Railway" built by privatization?

Our very own Indian Railways. These were built as crown monopolies - costs of their construction would be borne from funds raised internally, contributions from kingdoms and backstopped by the imperial government. Risks were borne by the imperial government too. Profits, of course, were sucked off to London. In that sense, they were private; and reflected the worst of the combination of colonialism and crony capitalism.


Sidenote continued:
http://arunsmusings.blogspot.com/2015/0 ... india.html

Katare
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Katare » 14 Oct 2017 09:31

nam wrote:
Katare wrote:Well, the problems with Indian economy are well understood -

Land, Labor and infrastructure.



I would say the problem is we don't produce anything worthwhile.

The same land, labor, infrastructure did not stop growth of IT. Bangalore has horrible infrastructure.

Companies are set up in Mumbai, rather than in some remote place,because of the existing ecosystem.It is probably the most expensive real estate in India. You can have multi floor manufacturing units if land is an issue.

Tatas have large manufacturing units, employing 100s of thousands.

Just like growth of IT triggered easier labour laws & education, infrastructure( office & transport) and demand for offices in most expensive places.

We need to produce something worthwhile. Something the world wants.. like Indian BPO & IT. Chinis do this very well.


Actually IT industry growth is the prime example of Land, Labor and infra bottleneck. The IT industry needs none of the three and that is why it thrived. If it needed roads, rails, ports, electricity, or if it was under unionized labor while competing against chinese cheap imports or if it neede thousands of acres of farm land it would not have fared any better. Mostly it needed a large horde of young engineers and office buildings with networked computers.

For similar reasons we are world leaders in gems/diamond/jewelry industry. Like IT It also does not need or use either of the three stressed bottle neck of indian economy.

We'll make worth while things when we'll have tools and ecosystem to build world class stuff until than its going to be IT, jewels and likes.

Modi could have tackled these problems in his first year and he did grab the bull by horns but quickly retreated under political considerations. If he comes back to power, ( i have a hunch he'll figure a way out) we can expect some actions again in 2019-20. Until than it is ram bharose bus, chali to bhagi nahi to lagao dhakka.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Katare » 14 Oct 2017 09:42

Rishirishi wrote:
Katare wrote:Well, the problems with Indian economy are well understood -

Land, Labor and infrastructure.

Both UPA2 and NDA2 have chosen to focus on the third problem- Infrastructure in full gusto! Benefits of infrastructure would achieve full flow only if the other two, the land and he labor, are also reformed.

UPA booby trapped Land pretty good before leaving and Modi lost his nerve by pulling back his legislature on land reforms. This helped him win many state elections but this could come back to bite him in general election. Labor reforms were attempted but with only minor tweaks not with bold reforms that are needed. Privatization is mostly off the table and only disinvestment is being attempted.

It is easy for me to write all this and even whine about it but these are age old mega problems left over from Nehru/Indira era that every govt since than have faced but but all have been very careful in only using small scalpel to carve an elephant. It's been almost 40 years and we have not reached to the main body yet.


I dont think privatisation or labour law is such a great deal. Most sectors now have to compete with private sector. Rail, coal and power distribution remains with GOI. I doubt if privatisation of Rail is such a great ide. No one has managed to building solid Railways by privatisation.


Totally disagree, in my opinion, take it for whatever it's worth, you couldn't be wronger. Labor is the bigget millstone, legacy of Nehru/Indira era, hanging on Indian economy's neck. Until it's cut down we'll not realize our potential in manufacturing. There is no room tor if's and but's on this one. Privatization is not one of the three fundamental problems of economy but still anyone who in 2017 thinks govt is more efficient in running bussinesses than private sectors is still living, atleast partially, in 1960s.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby A_Gupta » 14 Oct 2017 21:37

The problem with government run enterprises is that for political reasons they are never allowed to fail. The private sector achieves its "efficiency" through a ruthless survival of the fittest. Most businesses eventually fail. Of course, in a crony capitalist system, politically favored private businesses don't fail and this is no more efficient and less accountable than a proper public sector.

Katare
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Re: Currency Demonetisation and Future course of Indian Economy

Postby Katare » 15 Oct 2017 03:09

You are right. Airindia is running losses over 30k corers. PSU banks need more than Rs2 lakh corer of capital that govt does not have. Organized Labor won't allow disinvestment below 50% and govt can not cough up that kind of moolah which means not enough money to lend so whole economy is screwed.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby jpremnath » 15 Oct 2017 13:17

People pining for privatization of all PSUs ignore the sad state of corporate india..of course private companies revolutionized Telecom and sat television sectors. And they provide employment in numbers that govt and PSUs can never match. But we dont realise that vast majority of private companies are inefficient and poorly run. The quality of their products and services are shoddy to say the least. Innovation or R&D is zilch. We think they are in a survival of the fittest fight..but no..you can see the glaring inefficiencies and lethargy in their marketing, supply chain management, product quality and customer service...

How many world class companies or products can we list?Biocon and himalaya maybe.. and probably some more....But the remaining are really terrible...TCS, Infy and the lot are glorified labour contractors. Airtel is a poor version of vodafone. The whole TATA group is a sarkari org in private overall..Adanis probably run their ports better but they are the poster child of crony capitalism and run the whole show on debt... If you think we can give railways and other strategic sectors to private firms and see them blossom we are living in a fools paradise..just look at the british, their attempts to do this on railways is a failure. Trains dont run on time, costs go up, so does losses...Govt should withdraw from doing business, but it should be from sectors which are not strategic..like air india,

The steps to reform corporate india like the new sebi guidelines in works will hopefully improve the way their boards are run. We need a vibrant private sector but corporate india is not mature enough yet to take control of the country's lifelines like railways, petroleum and defence..

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Re: Currency Demonetisation and Future course of Indian Economy

Postby chetak » 15 Oct 2017 14:06

yensoy wrote:
Rishirishi wrote:No one has managed to building solid Railways by privatisation.


I understand what you are trying to say. But on a side note, do you know which is the biggest example of a "solid Railway" built by privatization?

Our very own Indian Railways. These were built as crown monopolies - costs of their construction would be borne from funds raised internally, contributions from kingdoms and backstopped by the imperial government. Risks were borne by the imperial government too. Profits, of course, were sucked off to London. In that sense, they were private; and reflected the worst of the combination of colonialism and crony capitalism.


sashi tharoor on the subject of Indian railways...........

The railways were first conceived of by the East India Company, like everything else in that firm’s calculations, for its own benefit. Governor-General Lord Hardinge argued in 1843 that the railways would be beneficial “to the commerce, government and military control of the country”. Ten years later, his successor Lord Dalhousie underscored “the important role that India could play as a market for British manufacturers and as a supplier of agricultural raw materials”. The vast interior of India could be opened up as a market only by the railways; lab­ourers could be transported where they were needed and its fields and mines could be tapped to send material to feed the ‘satanic mills’ of England.

In its very conception and construction, the Indian Rai­lways was a big colonial scam. British shareholders made absurd amounts of money by investing in the railways, where the government guaranteed returns on cap­ital of 5 per cent net per year, unavailable in any other safe investment. That was an extravagantly high rate of return those days, possible only because the government made up the shortfall from its revenues, payments that of course came from Indian, and not British, taxes.

These excessive guarantees removed any incentive for the private companies constructing the railways to economise—the higher their capital expenditure, the higher would be their guaranteed return at a high and secure rate of interest. As a result, each mile of Indian railway construction in the 1850s and 1860s cost an average of £18,000, as against the dollar equivalent of £2,000 at the same time in the US. In the event, it was 20 years or more before the first lines ear­ned more than 5 per cent of their capital out­lay, but even after the government had taken over railway construction in the 1880s, thanks to the rapacity of private British firms contracted for the task, a mile of Indian railway cost more than double the same distance in the equally difficult and less populated terrains of Canada and Australia.

It was a splendid racket for everyone, apart from the Indian taxpayer. In terms of a secure return, Indian rai­lway shares offered twice as much as the British government’s own stock. Guaranteed Indian railway shares abs­orbed up to a fifth of British portfolio investment in the 20 years to 1870—the first line opened in 1853—but only 1 per cent of it originated in India. Britons made the money, controlled the technology and supplied all the equipment, which meant once again that profits were repatriated. It was a scheme described at the time as “private enterprise at public risk”. All the losses were borne by the Indian people, all the gains pocketed by the British trader—even as he penetrated by rail deep into the Indian economy. The steel industry in England found a much-needed outlet for its overpriced products for railways in India: steel rails, engines, rail wagons, machinery and plants. Far from supporting the proposition that the British did good to India, the railways are actually evidence for the idea that Britain took much more out of its most magnificent colony than it put in.

Nor was there any significant residual benefit to Indians. The railways were intended principally to transport extracted resources—coal, iron ore, cotton and so on—to ports for the British to ship home to use in their factories. The movement of people was incidental, except when it served colonial interests; and the third-class compartments, with their woo­den benches and absence of amenities, into which Indians were herded, attracted horrified comment even at the time. And also questions in the toothless legislatures: there were 14 questions on this issue in the legislative assembly every year between 1921 and 1941, and 18 more annually in the Council of State. The yearly averages for 1937-1941 were 16 and 25 respectively. Mah­atma Gandhi’s first crusade on his return to India was on behalf of the third-class traveller. Yet, third-class passengers became a source of profit for the railways, since British merchants in India ensured that freight tariffs were kept low (the lowest in the world) while third-class passengers’ fares made up the railway companies’ principal source of profit. No effort was made, in laying railway lines, to ensure that supply matched the demand for popular transport.

Nor were Indians employed in the railways. Disc­rimi­natory hiring practices meant that key industrial skills were not effectively transferred to Indian personnel. The prevailing view was that the railways would have to be staffed almost exclusively by Europeans to “protect inv­estments”. This was especially true of signalmen, and those who operated and repaired the steam trains, but the policy was extended to such an absurd level that even in the early 20th century all the key employees, from dir­ectors of the Railway Board to ticket-collectors, were white men—whose salaries and benefits were also paid at European, not Indian, levels and largely repatriated back to England. Moreover, when the policy was relaxed and expensive European labour reduced, there was a continuing search for the most ‘British-like’ workers. Thus came the long-lasting identification of the Anglo-Indian community with railway employment, since at first it was these Eurasians who were trained to do the jobs that only Europeans had been ass­umed to be capable of doing previously. In keeping with British notions of eugenics, and since the Anglo-Indians were not a very large community, ‘martial’ Sikhs and pale-skinned Parsis were then employed as well, although they were only put in charge of driving engines within station yards and emp­loyed in stations with infrequent traffic.

Double standards prevailed in other ways: whereas in Britain it was common practice to ensure the merit-based promotion of firemen to drivers, or of station-masters of small rural stations to large stations, this did not happen in India because these junior positions were occupied by Indians, whose promotion would have be to posts otherwise occupied by Europeans. By 1900, in the regulations for pay, promotion and suitability for jobs, or what we would today describe as the human resource management rules, employees were subdivided into “European, Eurasian, West Indian of Negro descent pure or mixed, Non-Indian Asiatic, or Indian”. On employment, the local medical officer would certify the race and caste identity of a candidate and write it on his history sheet—thus determining his future pay, leave, allowances, and possible promotions, as well as place in the railway hierarchy for the rest of his career.

Racism combined with British economic interests to undermine efficiency. The railway workshops in Jamalpur in Bengal and Ajmer in Rajputana were established in 1862 to maintain the trains, but their Indian mechanics became so adept that in 1878 they started designing and building their own locomotives. Their success increasingly alarmed the British, since the Indian locomotives were just as good, and a great deal cheaper, than the British-made ones. In 1912, therefore, the British passed an Act of Parliament, explicitly making it impossible for Indian workshops to design and manufacture locomotives. The Act prohibited Indian factories from doing the work they had successfully done for three decades; instead, they were only allowed to maintain loc­omotives imported from Britain and the industrialised world. Between 1854 and 1947, India imported aro­und 14,400 locomotives from England (some 10 per cent of all British locomotives produced), and another 3,000 from Canada, the US and Germany, but made none in India after 1912. After Independence, the old technical knowledge was so completely lost to India that the railways had to go cap-in-hand to the British to guide them on setting up a locomotive factory in India again.

This is far from being a retrospective critique from the comfortable perspective of a 21st century commentator. On the contrary, 19th-century Indians were quite conscious at the time of the abominable role of the railways in the crass exploitation of their country. The Bengali newspaper Samachar wrote on 30 April 1884 that “iron roads mean iron chains” for India—foreign goods could flow more easily, it argued, killing native Indian industry and increasing Indian poverty. Nationalist voices like those of G.V. Joshi, G.S. Iyer, Gopal Krishna Gokhale and Dadabhai Naoroji were raised publicly in the 1890s, pointing out how limited the benefits of the railways were to India, how the profits all went to foreigners abroad, and how great was the burden on the Indian exc­hequer. And there are other examples to show how the interests of Indians were never a factor in railway operations: during World War I, several Indian rail lines were dismantled and shipped out of the country to aid the Allied war effort in Mesopotamia!

On the whole, therefore, the verdict of the eminent historian Bipan Chandra stands. British motives in building railways in India, he wrote, were “sordid and selfish—the promotion of the interests of British merchants, manufacturers and investors—at the risk and expense of Indian revenues”; their “essential purpose” being to “assist British enterprise in the exp­loitation of the natural resources of India”.

Quod erat demonstrandum.

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Mollick.R » 15 Oct 2017 17:03

Key points from the article............

1. The Index of industrial production (IIP) rose 4.3 per cent in August, reversing a contraction in June and faster than a 0.9 per cent rise in July.

2. There was more cheers for Modi. India's annual consumer inflation in September marginally eased to 3.28 per cent from a year ago.

3. India's trade deficit narrowed to $8.98 billion in September, its lowest in seven months.

4. Merchandise exports rose sharply in September, belying fears of a slump due to disruption and working capital issues brought on by the introduction of the goods and services tax.

5. Exports climbed 25.67 per cent in September, exceeding an 18.1 per cent increase in imports, helping to narrow the trade deficit to $8.98 billion from $9.07 billion in September 2016.


https://economictimes.indiatimes.com/news/economy/policy/its-a-happy-diwali-for-pm-narendra-modi-new-data-offers-short-reprieve/articleshow/61078792.cms

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Re: Currency Demonetisation and Future course of Indian Economy

Postby Mollick.R » 15 Oct 2017 17:05

Even though words of Gora Mem of IMF , doesn't matters much still posting

Describing the two major recent reforms in India - demonetisation and Goods and Services Tax (GST) - as a monumental effort, Lagarde said it is hardly surprising that there "is a little bit of a short-term slowdown" as a result.

"Turning to India...we have slightly downgraded India; but we believe that India is for the medium and long-term on a growth track that is much more solid as a result of the structural reforms that have been conducted in India in the last couple of years," IMF Managing Director Lagarde said.



https://economictimes.indiatimes.com/news/economy/indicators/indian-economy-on-very-solid-track-imf-chief-christine-lagarde/articleshow/61087784.cms


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