Indian Economy News & Discussion - Nov 27 2017

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ArjunPandit
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by ArjunPandit »

^^
1. Yes the world is always in flux but sometimes not doing anything also has an advantage, modern economic theories do not have anything to support that. But i think for few years we need to consolidate and let the clean up institutionalize itself. I would not go on expansion mode right now, but then I am not the best judge of future. Lets agree to disagree right now. I hear many people getting impatient right now in my circles too. But I am of the opinion that rather than expanding credit, bottlenecks into the economy, e.g., time to start business, catching defaulters, creating right environment where honest businessmen can succeed and those who cheat the system get the stick needs to be created.
2. Coming to defence, the fact we are on BRF want all that. The question is how. If i look in isolation, we grew militarily in 80s under rajiv, but in 90s ended up in near default. With China and pak a civilzationational war is going on. This war is more of attrition. Both China and pak are on different ends of spectrum towards destruction. Pakistan through low growth and bad economic fundamentals. China through cancerous growth and fudged up no.s. India i am betting is the kachua(tortoise). Chinese/SoKo/Taiwan way of command economy is perhaps not possible even under Modi. We are like that only.
Vivek K
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Vivek K »

I hope you’re right and India is not an Ostrich! Even our numbers are embellished somewhat.
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

https://economictimes.indiatimes.com/in ... 352683.cms
Consolidation of regional rural banks on government agenda
India is eyeing a mega revamp of its regional rural banks and the plan includes consolidation.
India is eyeing a mega revamp of its regional rural banks (RRBs) and the plan includes consolidation of these lenders for better operational efficiencies in line with the government's big rural focus.
Image
vijayk
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

https://economictimes.indiatimes.com/ne ... 340866.cms
View: Will the near future challenge the Modi hypothesis on growth?
Here's what might happen if economic numbers take a noticeable turn for the worse but BJP continues unabated.

Modi government is big on process improvements —hence the quick amendment to IBC —and not so keen on taking decisions —rolling back the ‘rich tax’ — the main virtue of which is enthusing the investing class. It’s possible to argue that other post-reforms governments would have probably taken more time to amend IBC and given in on the ‘rich tax’. Modi’s is not like any other postreforms government.
First, he emphasised changing overall environment (for example, systemwide availability of more liquidity) over special, targeted help in the matter of non-banking financial company (NBFC) liquidity problems.

Second, he pointed to specific domestic sectoral issues and global constraints while discussing stalled private investment in the real economy.

Third, he more than once stressed the importance of regulation-led clean-up, especially in finance.

arguments from the RBI governor tell us he doesn’t think the economy, and GDP growth, need short-term booster shots, that process improvements are crucial and will show results but that stakeholders should be patient, and that as important as GDP growth is, maintaining regulatory focus on risky and/or dodgy behaviour by financial actors is no less important.

no matter how aggrieved MICs are (and with markets now going down, MICs will fret even more), Modi isn’t going to change his economic worldview in the face of a fresh batch of what chattering classes will describe as bad economic numbers.

The ruling hypothesis of the ruling establishment seems to be that a higher economic tempo is a matter of ‘when’, not ‘if ’.
whether right or wrong, Mod 2.0 has a theory on economics and they are sticking to it
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

https://wap.business-standard.com/artic ... 056_1.html

Modi govt proposes major labour law changes for ease of compliance
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Suraj »

Output-Outcome Monitoring Framework: A Critical Budget Reform
key reform has been the development of the Output-Outcome Monitoring Framework (OOMF). This framework for FY 2019-20 covers major Central Sector (CS) and Centrally Sponsored Schemes (CSS) with outlays larger than Rs 500 crore, along with clearly defined and measurable output and outcome indicators as well as targets for the current financial year.

For instance, for the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (PM-JAY), which is a centrally-sponsored health insurance scheme, the financial outlay for 2019-20 is Rs 6,400 crore. The measurable outputs for the scheme include number of hospital admissions, number of identified beneficiaries, amount reimbursed for claims and number of hospitals empanelled. The targets for each of these respective outputs for the current fiscal year are 50 lakh, 5 crore, 4,000 crore and 16,500 respectively.

The outcome for this scheme is reduction in healthcare expenditures that push households into poverty. The overall impact of the initiative will be improved access to healthcare for poor and vulnerable households.

Similarly, under the National Rural Health Mission, the financial outlay for health system strengthening is Rs 27,039 crore for 2019-20. A key output for this intervention is expanding the basket of primary healthcare services provided through health and wellness centres. The target for the current financial year is to set up 40,00 such centres. A critical outcome for this initiative is improved utilisation of primary care services as well as screening and management of Non-Communicable Diseases (NCDs). For 2019-20, the targeted outcome is screening 1.5 crore people for NCDs.

The rationale behind presenting outputs and outcomes, in addition to budgetary outlays, is that it enables greater accountability among the executing agencies of various government schemes. It also helps to significantly boost the transparency, predictability and understanding of the government’s development agenda, by facilitating an open, accountable, proactive and purposeful style of governance through a transition from mere outlays to result-oriented outputs and outcomes.
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

https://www.firstpost.com/business/why- ... 48451.html
So what does Basu mean by saying he didn’t think there is an obvious problem with the GDP data calculation but admitted Subramanian’s paper revealed only the weakness in the economy during the disputed period? The fact is there was indeed a mismatch.

Why Kaushik Basu’s assessment on GDP debate and his prescription to cure economic slump are confusingRepresentational image. Reuters.
Having stated that the economy is staring at a slowdown phase, Basu has some interesting recommendations for the Narendra Modi government to “ward off short-run risk and strengthen long-run sustainable development?”. Usual prescriptions—higher household investments, infrastructure push, more focus on education etc—recommended by the economists from time to time. But with one exception—Basu proposes dilution in the roadmap to fiscal consolidation.

Basu recommends, “We should be prepared to make a measured increase in fiscal deficit for a year or two. This will boost demand for goods and be a much-needed shot-in-the-arm for India’s firms and farms. If the extra expenditure is directed at the poor and the agriculture sector that will help those who need it most,” Basu wrote.

Basu’s suggestion makes immense sense. At a time when the economy is going down on all fronts, there is no point in sticking to fiscal deficit obsession. But, at the same time, this wasn’t Basu said always. In 2013, when he was the chief economic advisor (CEA) in the United Progressive Alliance (UPA) government, Basu had all along argued in favor sticking to the roadmap to the extent possible even in a recessionary phase. He didn’t recommend this solution back then.

https://www.firstpost.com/business/indi ... 08741.html
Narendra Modi's $5 trillion economy dream is impossible without solving these five puzzles
Here is the puzzle: The government estimates Rs 100 lakh crore infrastructure investments over the next five years or an average Rs 20 lakh crore a year. This is a far cry from what is spent on infrastructure currently which is barely one-third of what is estimated. The question is, where will this money come from. India does not have powerful institutions that can fund long-gestation infrastructure projects. Banks do not have enough long-term liabilities to match such loans. Lenders have gone terribly wrong in the past by not following healthy lending practices.

About 70 percent of the banking system (read state-run banks) are at the mercy of the government for capital for its survival. India does not have a deep bond market to take up the financing burden. The state-insurer Life Insurance Corporation of India (LIC) has been overexploited to do businesses it has never understood. There aren't many other options left to take up the infra-funding burden. The government's plan to borrow off-budget is risky and unadvisable. The question that comes up again is, who will fund the multi-billion infra dream.

The second major drag is the government's excessive involvement in businesses. The government remains a majority, active participant in several entities including banks, airline, infrastructure firms. It controls 70 percent of the banking industry. This participation has resulted in a lot of money getting stuck in these entities. The government will have to exit these businesses backed by a solid, aggressive disinvestment plan to unlock this money.

The third is the depressing pace in carrying out land and labour reforms. This has been a major turn-off for investors looking at setting shop in the country. Sitharaman's Budget talks about narrowing labour laws. This is a step in the right direction but quick execution is important. Since land is a state subject, respective state governments need to work with the Centre to bring about the change. In the past, investors got a shocker from episodes such as Singur. These kinds of incidents cannot be allowed to be repeated if India wants to progress economically.

Fourth, the government will have to also need to work out an exigency plan to get private investors back. This is even more critical now since domestic consumption is dropping to dangerous levels. Mint quoted a CMIE report that said investment in new projects plunged to a 15-year low in the quarter ending June 2019. Both private and public sectors announced new projects worth Rs 43,400 crore in June 2019 quarter, 81 percent lower than what was announced in the March quarter and 87 percent lower than during the same period a year ago. According to the finance ministry’s data, projects worth almost Rs 11 lakh crore remain ‘stalled’ or are having issues. Railways, roads, and power sectors account for more than half of these stalled projects.

Fifth, as this writer argued in an earlier article, so far the economy has been largely riding on public money. Government spending has largely aided GDP growth. Sure, this was needed at a time when private investors were absent. However, an economy which rides largely on government money for a prolonged period of time does not promise much to the economy in the long run. What is needed is the participation of private investors.
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Suraj »

Finance Minister introduces IBC bill for faster bad loan resolution; key things to know
Finance Minister Nirmala Sitharaman has proposed The Insolvency and Bankruptcy Code (Amendment) Bill 2019 in the Rajya Sabha on Wednesday. The bill seeks timely completion of debt resolution process under IBC and provides more clarity on the rights of stakeholders.

Key proposals
Under the bill, the adjudicating authority will now be required to provide written reasons in writing if the authority fails to admit or reject the received application within 14 days.
The new resolution deadline for completion of CIRP (Corporate Insolvency Resolution Process) is now limited 330 days, including litigation and other judicial processes.
With the proposed changes, greater clarity on the rights and duties of authorised representatives of voters, the permissibility of corporate restructuring schemes, manner of distribution of amounts amongst financial and operational creditors as well as the applicability of the resolution plan on all statutory authorities is expected.
According to the bill, the Committee of Creditors may now take the decision to liquidate the corporate debtor. This can be done any time after the Committee of Creditors has been constituted and before preparation of Information Memorandum.
Provision has been made for votes of all financial creditors covered under section 21(6A). The votes shall be cast in accordance with the decision approved by the highest voting share (more than 50%) of financial creditors on present and voting basis.
The bill also says that the resolution plan will be binding on all the stakeholders including the Central Government, any State Government or local authority to whom the debt is owed.
Original text of bill in full (PDF)
nachiket
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by nachiket »

Do Finance bills need to be passed in RS? I thought they did not need to be and LS was enough.
Suraj
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Suraj »

India jumps 5 places to 52nd in 2019 Global Innovation Index rankings
Original report available here
Table A indicates that India outperforms innovation level for income level expectations
Table B shows that India has 3 universities among the top 10 for all middle income countries - same as China.
Figure G shows that India ranks #2 behind China in aggregate global innovation index among all middle income countries, counting both upper and lower middle income countries (India still classifies as lower-middle).
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Suraj »

nachiket wrote:Do Finance bills need to be passed in RS? I thought they did not need to be and LS was enough.
IBC Act is not a money bill, i.e. it doesn't just deal with budgetary matters. It sets up entire institutions like NCLT and repeals multiple prior bankruptcy codes and institutions (anyone remember BIFR ?)
nachiket
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by nachiket »

Suraj wrote:
nachiket wrote:Do Finance bills need to be passed in RS? I thought they did not need to be and LS was enough.
IBC Act is not a money bill, i.e. it doesn't just deal with budgetary matters. It sets up entire institutions like NCLT and repeals multiple prior bankruptcy codes and institutions (anyone remember BIFR ?)
Got it. I was hoping they could get away with calling it a Finance bill.
Suraj
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Suraj »

nachiket wrote:
Suraj wrote: IBC Act is not a money bill, i.e. it doesn't just deal with budgetary matters. It sets up entire institutions like NCLT and repeals multiple prior bankruptcy codes and institutions (anyone remember BIFR ?)
Got it. I was hoping they could get away with calling it a Finance bill.
It's not that simple :) However it shouldn't be a problem passing this amendment. It is good to see that the government continues to "own" its reforms by constantly monitoring their real world performance and keep updating their laws to address consequences that could not be originally anticipated. This is good administration at work, a reflection of the mindset pursued by the budget output/outcome analysis quoted in at earlier post.

In comparison, remember the SEZ Act ? Exports from SEZs have essentially been stagnant in dollar terms for years now, peaking in fiscal 2012 and then treading water since. At some point, when manufacturing supply chains develop, I think GoI will give this act another look and try to make it work better with Make In India.
ArjunPandit
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by ArjunPandit »

Very imp point sooraj sir.. It was heartening to actually see bills being passed at left right and centre in first session itself....
Rahulsidhu
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Rahulsidhu »

The IMF has revised down growth projections for India in its July update.
India’s economy is set to grow at 7.0 percent in 2019, picking up to 7.2 percent in 2020. The downward revision of 0.3 percentage point for both years reflects a weaker-than-expected outlook for domestic demand.
https://www.imf.org/~/media/Files/Publi ... ashx?la=en

I would expect further downward revisions in October.
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

https://www.firstpost.com/business/subh ... 56981.html
Subhash Chandra Garg’s exit and Bimal Jalan report: Did dissent on surplus transfer trigger top official’s ouster from
What will Subhash Chandra Garg’s abrupt exit from government mean for Bimal Jalan report on Reserve Bank of India’s capital surplus transfer to the government? Garg seeking voluntary retirement from service has left many surprised. Especially because the decision to resign from the government service came after he was transferred to the Power Ministry. For Garg, Power Ministry is a demotion from the economic affairs. Also, note that Garg’s exit happens shortly after his reported dissent note on the Bimal Jalal Committee report on Reserve Bank of India's (RBI) economic capital framework (ECF).

The Jalan panel, which was formed in December 2018 on ECF, is yet to table its report. The committee was formed as a consensus solution after a long, public fight between the RBI and the government on the issue of RBI’s capital surplus transfer to the government. Jalan panel's recommendations will be crucial to settle the debate on RBI's surplus transfer to the government.


Garg was instrumental in mooting the idea of tapping excess funds from the banking regulator. With Garg’s exit, the question arises whether the Jalan panel will have to rework its report seeking fresh inputs from the Finance Ministry.

The ECF is one issue, but Garg has spearheaded too many controversial battles for the Finance Ministry with the RBI. This includes the Finance Ministry’s endless battle with Urjit Patel’s RBI on a range of issues including public sector bank (PSB) dual regulation, RBI’s governance and so on.
There is no clarity on what exactly is the crux of the Jalan panel report on the RBI’s surplus transfer. But according to a report, the panel might recommend RBI’s capital surplus transfer to the government over a period of 3-5 years. However, there are also reports that suggested Garg—a member of the panel—apparently dissented with this decision and insisted on a lumpsum transfer.

There was another proposal in the Budget that said market regulator Securities and Exchange Board of India (SEBI) should constitute a reserve fund, and 25 percent of the annual surplus of the general fund should be credited to this reserve fund. After meeting all expenditures, the SEBI should transfer 75 percent of the surplus amount to the Consolidated Fund of India, according to the Budget proposal, it said.
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Vips »

New defence fund may reduce divisible central tax pool.

The Fifteenth Finance Commission (15th FC) headed by NK Singh is expected to create a defence and internal security fund likely to be called Rashtriya Suraksha Nidhi (RSN) by setting aside money from gross tax revenues of the central government. The Union cabinet cleared enabling approvals on July 17, increasing focus on national security while also indicating it wants states to share the financial burden of maintaining and upgrading its security apparatus, including buying weapons from global suppliers, ET’s conversationswith highly placed sources and review of confidential documents reveal.

Although the original Terms of Reference (ToR) of the 15th FC did ask it to look into the demand on central resources for defence and national security, it had not specifically mandated it to suggest creation of a fund outside the Consolidated Fund of India. The cabinet decision to amend the ToR came after prolonged discussions between the government and the FC and splitting hairs over the commission’s mandate and legal powers failed to clear a way for creating an exclusive corpus.

A top official of the 15th FC had told ET before the Cabinet approval came that the commission did not have the mandate to create the fund. “We can only recommend a formula for sharing central tax revenues between the union and the states. The centre can decide whatever it wants to do with its share. Our job is to find a balance,” he had told ET on condition of anonymity.

In reply to ET’s queries after the July 17 cabinet decision, a commission spokesperson said: ``In view of the fact that the commission is yet to receive revised TOR from the President of India, it is not able to respond at this moment of time.’’

After year-long deliberations, the 15th FC came up with four options. One was to allocate funds to the centre through a cess or a surcharge. However, it would have been steep as defence and security expenditure requirement is high. Also, the 10th Finance Commission had laid down the principle that cess and surcharge should be temporary and rare.

The second option was to increase the weightage of defence and national security while working out the devolution formula. That would have likely shrunk the states’ share from the 14th FC’s award of 42%. The third way was to earmark a portion of the centre’s share for defence which would have helped create a fund but made no difference to the money available to the central government.

The last and preferred option was to sequester a portion of the gross tax revenues itself for defence and internal security by creating a Rashtriya Suraksha Nidhi before computing the divisible pool. That means the total money available for sharing itself would be less. It was a controversial option but the most viable one. The FC then sought expert opinion from senior lawyer K Parasharan

Image

The legal expert said in the context of cooperative federalism, any allocation for defence and internal security under Article 280 (the FC’s
Constitutional foundation) “may result in criticism by the states that their share of allocation has been reduced from the previous years”.

He went on to say that the share of the states from the divisible pool was not a benefaction of the Union or Finance Commission. “It is an entitlement of states whose contours are to be determined fairly by the FC on the basis of a clear and rational formula.”

The way out, Parasharan offered, was the commission could be empowered if the President made a supplementary reference enabling the 15th FC to consider how defence and internal security should be funded while devising its vertical devolution formula. The legal opinion which ET has reviewed clearly said without the amendment, the 15th FC could only make a suggestion and the government would have to go to Parliament to introduce a defence-specific levy.

Discussions between the defence ministry and the FC began in early 2018 after the finance ministry rejected the demand for a nonlapsable fund in December 2017. ``I am in fact even talking to the (15th) Finance Commission’s new chairman NK Singh to make sure that defence procurement funding, especially capital expenditure ...is a non-lapsable kind of allocation,” the then defence minister and now finance minister Nirmala Sitharaman had said at a Confederation of Indian Industry event.

In a presentation to the FC, the defence ministry had argued that defence and national security should be included ``in our understanding of sustainable development’’. To bolster its argument, the government pointed to the United Nations declaration on Transforming our world: The 2030 agenda for sustainable development which stated, “there can be no sustainable development without peace and no peace without sustainable development”, documents reviewed by ET show.

It said issues like terrorism, insurgency and securing national borders should be recognised as a shared responsibility of the union and the states without which the national development framework will remain incomplete.

The government based its demand on a report of Parliament’s Standing Committee on Defence headed by BC Khanduri that had recommended creation of a non-lapsable, roll-on fund for defence purchases. Although the defence ministry was in favour of it, the finance ministry had rejected it saying balances in non-lapsable fund anyway will not be automatically available to the ministry without Parliament approval. It said non-lapsable funds were often idly parked instead of being used to pay off urgent bills.

``Moving general revenues out of the CFI (Consolidated Fund of India) and parking in corpus fund is against the spirit of Article 266(1) [which governs the CFI] of the Constitution,’’ the finance ministry argued. It feared that allowing one could raise competing demand from other ministries. The government then approached the 15th FC.

It told the commission that defence purchases took time and prolonged negotiations, and often funds lapsed because they were not utilised in the year they were allocated. The standing committee had noted that the finance ministry always reduced by mid-year what it promised in the annual budget saying expense trends showed the ministry was not spending as much as budgeted. “Though there has been underutilization of capital budget with reference to Budget Estimates (except in 2016-17), there has been either excess expenditure or more than 99.9% utilization when compared to Final Grant,’’ the committee noted.

It also pointed out that underutilization of funds compared to budget estimates allocated showed inefficient budgetary planning by the defence ministry.

The defence ministry wanted India’s defence expenditure to be benchmarked to countries in the North Atlantic Treaty Organisation (NATO) which are expected to spend at least 2 per cent of their GDP on defence. Incidentally, the US has criticised NATO allies for not keeping up their spending to the promised 2% even as the US Senate passed a bill elevating India to a status equivalent to them for defence deals. The Modi government has gradually been increasing purchases from the US with which it is also engaged in a confrontation over trade imbalances.

Indian ambassador to the US Harsh Shringla has indicated that India would buy more weapons from the US. “There has been a tradition of dependence on defense equipment from Russia,” Shringla was reported as saying in for defence and national security, it had not specifically mandated it to suggest creation of a fund outside the Consolidated Fund of India. The cabinet decision to amend the ToR came after prolonged discussions between the government and the FC and splitting hairs over the commission’s mandate and legal powers failed to clear a way for creating an exclusive corpus.
A top official of the 15th FC had told ET before the Cabinet approval came that the commission did not have the mandate to create the fund. “We can only recommend a formula for sharing central tax revenues between the union and the states. The centre can decide whatever it wants to do with its share. Our job is to find a balance,” he had told ET on condition of anonymity.

In reply to ET’s queries after the July 17 cabinet decision, a commission spokesperson said: ``In view of the fact that the commission is yet to receive revised TOR from the President of India, it is not able to respond at this moment of time.’’

After year-long deliberations, the 15th FC came up with four options. One was to allocate funds to the centre through a cess or a surcharge. However, it would have been steep as defence and security expenditure requirement is high. Also, the 10th Finance Commission had laid down the principle that cess and surcharge should be temporary and rare.

The second option was to increase the weightage of defence and national security while working out the devolution formula. That would have likely shrunk the states’ share from the 14th FC’s award of 42%. The third way was to earmark a portion of the centre’s share for defence which would have helped create a fund but made no difference to the money available to the central government.

The last and preferred option was to sequester a portion of the gross tax revenues itself for defence and internal security by creating a Rashtriya Suraksha Nidhi before computing the divisible pool. That means the total money available for sharing itself would be less. It was a controversial option but the most viable one. The FC then sought expert opinion from senior lawyer K Parasharan.

The legal expert said in the context of cooperative federalism, any allocation for defence and internal security under Article 280 (the FC’s Constitutional foundation) “may result in criticism by the states that their share of allocation has been reduced from the previous years”.

He went on to say that the share of the states from the divisible pool was not a benefaction of the Union or Finance Commission. “It is an entitlement of states whose contours are to be determined fairly by the FC on the basis of a clear and rational formula.”

The way out, Parasharan offered, was the commission could be empowered if the President made a supplementary reference enabling the 15th FC to consider how defence and internal security should be funded while devising its vertical devolution formula. The legal opinion which ET has reviewed clearly said without the amendment, the 15th FC could only make a suggestion and the government would have to go to Parliament to introduce a defence-specific levy.

Discussions between the defence ministry and the FC began in early 2018 after the finance ministry rejected the demand for a nonlapsable fund in December 2017. ``I am in fact even talking to the (15th) Finance Commission’s new chairman NK Singh to make sure that defence procurement funding, especially capital expenditure ...is a non-lapsable kind of allocation,” the then defence minister and now finance minister Nirmala Sitharaman had said at a Confederation of Indian Industry event.

In a presentation to the FC, the defence ministry had argued that defence and national security should be included ``in our understanding of sustainable development’’. To bolster its argument, the government pointed to the United Nations declaration on Transforming our world: The 2030 agenda for sustainable development which stated, “there can be no sustainable development without 7/25/2019 New defence fund may reduce divisible central tax pool peace and no peace without sustainable development”, documents reviewed by ET show.

It said issues like terrorism, insurgency and securing national borders should be recognised as a shared responsibility of the union and the states without which the national development framework will remain incomplete.

The government based its demand on a report of Parliament’s Standing Committee on Defence headed by BC Khanduri that had recommended creation of a non-lapsable, roll-on fund for defence purchases. Although the defence ministry was in favour of it, the finance ministry had rejected it saying balances in non-lapsable fund anyway will not be automatically available to the ministry without Parliament approval. It said non-lapsable funds were often idly parked instead of being used to pay off urgent bills.

``Moving general revenues out of the CFI (Consolidated Fund of India) and parking in corpus fund is against the spirit of Article 266(1) [which governs the CFI] of the Constitution,’’ the finance ministry argued. It feared that allowing one could raise competing demand from other ministries. The government then approached the 15th FC.

It told the commission that defence purchases took time and prolonged negotiations, and often funds lapsed because they were not utilised in the year they were allocated. The standing committee had noted that the finance ministry always reduced by mid-year what it promised in the annual budget saying expense trends showed the ministry was not spending as much as budgeted. “Though there has been underutilization of capital budget with reference to Budget Estimates (except in 2016-17), there has been either excess expenditure or more than 99.9% utilization when compared to Final Grant,’’ the committee noted.

It also pointed out that underutilization of funds compared to budget estimates allocated showed inefficient budgetary planning by the defence ministry.

The defence ministry wanted India’s defence expenditure to be benchmarked to countries in the North Atlantic Treaty Organisation (NATO) which are expected to spend at least 2 per cent of their GDP on defence. Incidentally, the US has criticised NATO allies for not keeping up their spending to the promised 2% even as the US Senate passed a bill elevating India to a status equivalent to them for defence deals. The Modi government has gradually been increasing purchases from the US with which it is also engaged in a confrontation over trade imbalances.

Indian ambassador to the US Harsh Shringla has indicated that India would buy more weapons from the US. “There has been a tradition of dependence on defense equipment from Russia,” Shringla was reported as saying in Washington in May.

“But if you go by SIPRI (Stockholm International Peace Research Institute) figures, in the block year 2008 to 2013 we imported 76% of our defense items from Russia. In the next five-year block, from 2013 to 2018, this came down 58% and in the same period our imports from the United States increased by 569%,” he was quoted as saying. “So that itself tells you that, when we have a choice ... we are obviously diversifying our purchases.”

India’s defence budget for 2019-20 is at Rs 3.05 lakh crore is 1.45% of GDP of which a little over a third is capital expenditure.
vijayk
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

vijayk wrote:https://www.firstpost.com/business/subh ... 56981.html
Subhash Chandra Garg’s exit and Bimal Jalan report: Did dissent on surplus transfer trigger top official’s ouster from
Ishkaran Singh Bhandari
@Ish_Bhandari

Transfer or Resignation of Mr Garg is only effective, if there is roll back & rationalisation of certain decisions of the Budget.
Ishkaran Singh Bhandari
@Ish_Bhandari
Heavy Taxation & Income redistribution is being talked about.

Wonderful!
May be all the criticism against Tax to death reached the ears of Govt.

Don't know if this guy is fall guy or he is the man behind but there is at least some realization
Prasad
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Prasad »

That RSN idea is not going to work. States may agree to funding CAPF (if that) but will and shouldn't agree to funding the armed forces. What else is the central government there for?
Rahulsidhu
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Rahulsidhu »

Happy to see this being said:

https://swarajyamag.com/economy/its-the-economy-stupid
It is by far well recognised that the economy is in trouble, and that growth in the first quarter of this financial year is likely to be well below 6 per cent. The Union Budget tried to address some of the challenges that our economy faces, and thus recovery in the third quarter looked likely but with global growth slowing there is a lot that we need to get right.
There was an error that was made by the government and it was in terms of accepting the monetary framework that wasn’t suitable for a developing country. The error was followed up by an illusion that it was successful in lowering inflation levels in the economy. Yes, inflation was muted but it wasn’t because of the MPC or because of our interest rates policy; it was because of muted commodity prices along with a departure from high increments in minimum support prices (MSPs) during the United Progressive Alliance (UPA) era.
At the same time, reverse the surcharge or offer a resolution to the issue of its applicability on trusts. Such measures will revive investor confidence, boost economic growth and lead to higher revenue mobilisation. Further, it’s about time we start reducing our small savings rate on an aggressive basis while the RBI should be aggressive in reducing interest rates. We have to bring our cost of capital down to ensure revival of economic activity in the short run.

It is important for the policy-makers to realise that to fulfil the promise of development, they need resources and merely redistribution or higher taxes will not help them in achieving the same. What is genuinely required is growth because only when the cake is large enough, we will be able to ensure that everyone gets adequate amount of it.
vijayk
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

https://www.businesstoday.in/current/ec ... 65512.html
India's richest state Maharashtra and the most populous Uttar Pradesh are among the states leading the ongoing economic slowdown in the country. The heart of the nation Madhya Pradesh, capital New Delhi's neighbour Haryana and the biggest NE state Assam too are among the states where consumption is projected to slump this year, according to market research firm Nielsen India's report titled 'India FMCG Growth Snapshot'.

Fast Moving Consumer Goods (FMCG) sector will face a slowdown in 2019 with the deceleration being driven by North and West zones.

"Taking a regional lens - the slowdown is driven by north and west zones, where growth has come down to single-digit in Q2. Haryana, Madhya Pradesh, Uttar Pradesh, Maharashtra and Assam are leading the slowdown," said Sunil Khiani, Head of Retail Measurement Services, Nielsen South Asia in the report
Meanwhile, the rural markets have shown signs of a growth slowdown more than the urban areas even though they continue to grow ahead of the urban markets. "Rural is slowing down at double the rate of urban," noted Nielsen. Due to this, the upcoming June quarter earnings of some of India's biggest FMCG companies might get affected.

The deceleration in sales of FMCG products in the rural areas was 37% of total spends for the sector and happened at a faster rate as compared to urban markets. The rural growth plunged 10.3% in the April-June quarter of 2019, down from 12.7% logged last year
GOvt. has to put more money in people's pocket.
vijayk
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

https://www.businesstoday.in/current/co ... y-Politics

Revenue growth for India Inc falls to six-quarter low in Q4 FY19: report
Weak consumer sentiment and softening of commodity prices pushed Indian corporate sector's revenue growth to a six-month low in the March quarter
The revenue growth of the Indian corporate sector slumped to a six-quarter low in the March quarter of FY19, a report said. It was weak consumer sentiment and softening of commodity prices that brought about the decline, it further said.

Credit rating agency ICRA analysed the quarterly financial results of 304 companies for this report. It claimed that revenue growth in consumer-linked sectors in the sample was 2.3 per cent in the March quarter of on an annual basis, down from 9.8% in Q3 FY2019. Comparatively, the revenue growth in commodity-linked sectors was at 12.4% in Q4 FY2019 on a Y-o-Y basis, down from 31.0% in Q3 FY2019, the report added.


Indications from auto OEMs and FMCG companies point towards a slowdown in rural growth which can be attributed to a muted rabi harvest, the report further said.

"The weakness in the consumer-linked sectors was visible in the decline in wholesale dispatches of passenger vehicles and two-wheelers in Q4 FY2019 and sequential decline in same-store sales growth of quick-service restaurants and retail chains and even FMCG companies. The decline in consumer sentiments was reported in both urban and rural segments, as reported by Auto OEMs and FMCG companies," said Shamsher Dewan, Vice President - Corporate Sector Ratings, ICRA.
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by A Nandy »

https://www.livemint.com/news/india/ind ... 61033.html
New Delhi: India is putting the final shape on a plan to build at least four Tesla-style giga factories to manufacture batteries with an investment of around $4 billion, as the country prepares to switch to electric vehicles to curb pollution and cut its dependence on foreign oil.

“We are moving ahead with the plan and a cabinet note for the same has been floated," said a senior government official, requesting anonymity. “Why should India import battery storage units when we have the largest market here?"

Aimed at securing India’s energy needs, the plan to set up these factories of 10 gigawatt hours (GWh) each is being helmed by federal policy think tank NITI Aayog and looks to accomplish what Tesla has done at its Gigafactory in Nevada, US.

“The focus on battery storage manufacturing will enable India to develop an electric vehicle ecosystem including manufacturing and R&D, an opportunity the country missed while developing the solar industry," said Rupesh Agarwal, founder of AEM, an electric mobility company.
Manu
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Manu »

https://www.washingtonpost.com/world/as ... 7fa411e991
India is no longer the world’s fastest-growing major economy. Was it ever?
By Joanna Slater
July 25
NEW DELHI — It was not the kind of news a freshly reelected government likes to hear.

Days after Narendra Modi was sworn in for a second term as India’s prime minister, industry data showed that sales of passenger vehicles experienced their biggest slump in 18 years in May. The next month’s figures were almost as bad, indicating substantial declines in the number of cars sold nationwide compared with a year earlier.

The nose-dive in the auto industry feeds into a growing set of worries about India’s economic trajectory. In recent years, India’s official gross domestic product (GDP) figures showed it to be the fastest-growing major economy in the world. Now its economy is undeniably losing speed, and the key uncertainty is how long the softer pace of growth will last.

What’s more, some economists are questioning whether India truly deserved the title of the globe’s fastest-growing major economy in the first place — and those questions are coming straight from the top.
In June, Arvind Subramanian, who stepped down as the government’s chief economic adviser last year, released a paper arguing that India’s GDP growth was considerably slower than the official figures showed from 2012 to 2017. The government rejected such conclusions.

Still, all of this adds up to a major policy challenge for the Modi government. To achieve its goal of turning India into a $5 trillion economy by 2024, the economy must expand significantly faster than it is growing today. Rapid economic growth is also crucial if India is to generate jobs for its youthful workforce, eradicate extreme poverty and achieve Modi’s aim to turn India into a major player on the world stage.

The ripples of unease about the accuracy of the official figures make the task even trickier. If the “government itself is formulating policies based on growth numbers that may not be correct, then you are setting yourself up for making the wrong policy choices,” said Jahangir Aziz, head of emerging market economics at JPMorgan Chase.
The predicament of the auto industry is a prime example of the effect of slower growth. Some manufacturers have announced rolling shutdowns of their production lines because there is not enough demand for their vehicles.

“It’s very bad,” said Sugato Sen, deputy director general of the Society of Indian Automobile Manufacturers. He said the only period he could remember when the business experienced a similarly prolonged slump came in 2001.
Regulatory changes have increased the cost of cars, and a credit squeeze has affected nontraditional lenders extending auto loans. But fundamentally, Sen said, the decline in sales is a question of sentiment. The sector “depends very significantly on how people feel,” he said. “When the economy grows, the industry does well, but when the growth rate falls below a certain level, that impacts the industry very, very significantly.”
In the fiscal year that ended in March, India’s GDP growth declined to 6.8 percent, the lowest rate in five years. In the most recent quarter, the annual growth rate was just 5.8 percent, the first time the country’s quarterly economic growth trailed China’s in two years. India’s challenge is an echo of what developing economies around the world are facing as a widening trade war initiated by the United States depresses sentiment and investment. India’s state-owned banks are also burdened by corporate loans gone sour, which has made them more reluctant to lend.

Some economists see India’s slowing growth as a temporary phenomenon. They say output will re-accelerate as measures to kick-start economic activity — such as lowering interest rates — gain traction. “Growth is slipping, but you need to look a little ahead,” said Dharmakirti Joshi, chief economist at Crisil, an Indian ratings firm owned by Standard & Poor’s. “I’m more positive on the, let’s say, five-year outlook than the current year outlook.”

Others say the deceleration is partly the product of some of the Modi government’s policy choices in its first term. Such measures include the decision to implement a nationwide value-added tax (a step economists say is necessary in the long run) and the surprise decision to invalidate most of the country’s bank notes (a step many economists say was disastrous).

Other experts contend the malaise in the economy runs deeper and preceded the Modi government. Subramanian argued in a paper first released in June that India’s GDP growth figures from 2012 to 2017 do not correspond with some of the underlying economic indicators.

According to the official figures, “India somehow sustained an economic boom in an environment with substantially lower investment, profits, exports, credit financing, and probably consumption,” Subramanian wrote in a follow-up piece this month. “That leaves us with a deep puzzle.”

By his calculations, rather than expanding at a rate of 7 percent per year, India’s economy probably expanded at closer to 4.5 percent per year after 2011 — an economy growing “solidly but not spectacularly.”

Subramanian’s piece set off a minor firestorm. A council of economists who advise Modi disputed the arguments in the paper and said it “lacks rigor.” Rakesh Mohan, the former deputy governor of India’s central bank, expressed doubts about Subramanian’s methodology and questioned his decision to go public with a detailed analysis.
“You should be telling the truth, but in what fashion?” said Mohan.

If Subramanian’s conclusions are correct, then “any company, any investor” would have to rethink its expectations of India’s economy.
kit
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by kit »

kit wrote:
Rishirishi wrote:
Indians oil import bill is 115 billion dollars per year. That money goes out of the country and part of it ends up in TSP.

India has 180 000 km of national and state roads. Each charging station costs 500K dollars. for a mere 10 billion one could set up 20 000 charging stations. That would be sufficient to have a charging station every 10Km. In cities charging can be made available in all parking lots. Such plug-points are relatively inexpensive (in the thousands of rupees).
Once the charging is in place the electric cars would follow. Taxis and trucks would go electric very fast, as electric is much cheaper to run but a bit costly to purchase. A typical car can drive about 4km on 1 unit of electricity About Rs 2 per km. For petrol the cost is around Rs 6 per km. If the car does an average of 200km per day (taxi) The saving would about Rs 288 000 per year. The EV car would typically cost an addition of Rs 500 000. Hence a payback of only 18 months. Similar example exist for trucks. The charging takes about 30 min.
I guess some sort of subsidy by making purchase of electric cars VAT free will boost up their uptake many times .. without much expenditure from the government !

https://economictimes.indiatimes.com/in ... 407883.cms

"We welcome the GST Council's historic decision to reduce the GST on electric vehicles from 12 per cent to 5 per cent and on EV chargers from 18 per cent to 5 per cent.
kit
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by kit »

A Nandy wrote:https://www.livemint.com/news/india/ind ... 61033.html
New Delhi: India is putting the final shape on a plan to build at least four Tesla-style giga factories to manufacture batteries with an investment of around $4 billion, as the country prepares to switch to electric vehicles to curb pollution and cut its dependence on foreign oil.

“We are moving ahead with the plan and a cabinet note for the same has been floated," said a senior government official, requesting anonymity. “Why should India import battery storage units when we have the largest market here?"

Aimed at securing India’s energy needs, the plan to set up these factories of 10 gigawatt hours (GWh) each is being helmed by federal policy think tank NITI Aayog and looks to accomplish what Tesla has done at its Gigafactory in Nevada, US.

“The focus on battery storage manufacturing will enable India to develop an electric vehicle ecosystem including manufacturing and R&D, an opportunity the country missed while developing the solar industry," said Rupesh Agarwal, founder of AEM, an electric mobility company.
this move will promote low cost production and more than likely the country will emerge as a major exporter of lithium batteries., i think a strategic move would be to acquire lithium mines abroad.
kit
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by kit »

https://economictimes.indiatimes.com/ne ... 406051.cms


India, for instance, has set an ambitious goal for itself of becoming a $5 trillion economy by 2024. A lot has been discussed and debated on the development target and its feasibility, but it cannot be denied that the goal is a worthy one to pursue and would require a focused approach by the government on key growth areas to obtain the desired results. Achieving optimal returns with limited resources in a short time frame will be a challenging ask. Data will play a key role in adopting a focused ..

Read more at:
//economictimes.indiatimes.com/articleshow/70406051.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
vijayk
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

http://www.openthemagazine.com/article/ ... opulist-no
THE GOVERNMENT FACES an extremely difficult fiscal situation, comparable to 1966 and 1991. What’s worse, the economy is in a very bad shape. At the heart of the problem lies low overall demand which is made up of three components: consumer demand, corporate demand and government demand. This Budget has not addressed any of these adequately. Perhaps it cannot. Since tax revenues either through direct or indirect taxes did not meet their targets last year and don’t look like they will this year, the only way the Government can increase its expenditure is by borrowing more. But Government spending is currently constrained by Modi’s determination to keep it below 4 per cent.
Again, as I had mentioned, the other aspect of Modi’s style which has been ignored is that he is trying to shift the emphasis from equity to efficiency all the while not appearing to do so. This is a big change from the Congress’ post-1970 approach which made all three factors of production the costliest in the world and thus made the Indian economy amongst the most inefficient in the world. It is because of this that Modi’s Make in India has failed and fresh investment has not happened. It is also because of this that industries relocating out of China have gone to Bangladesh, Vietnam and the Philippines instead of coming to India. It makes no commercial sense to come here.

And as has been pointed out by me, Modi has sought to fix the capital problem first because labour and land reforms both come with millions of loseable votes. The Modi Government has introduced changes that seek to squeeze more out of scarce capital. If these incentives and disincentives are not tampered with by successor Governments—for example, the bankruptcy laws—the Indian economy will start using capital far more efficiently than it has since 1972. And once it does that, the cost of capital will begin to come down.

That said, there have also been the quixotic aspects of Modi’s approach to economic problems. Demonetisation and rushing into the introduction of the Goods and Services Tax (GST) before the technological and administrative systems were ready for it stand out. His insistence that the GST on 62 per cent of the products be kept at zero led to the remaining things being taxed at rates far higher than they would have otherwise been.

Overall, therefore, it would not be wrong to say that Modi’s style of economic governance, though largely well-intentioned, has also been very political—mind you, not populist—and whimsical. In mitigation one could say that when faced with a near-empty fisc and massive agenda, he chose the less harmful way of financing Government programmes by collecting taxes rather than printing notes, which is what the Congress would have done.

In conclusion, if we want to be generous, we can say this was only the first Budget of Modi’s second term and therefore some tentativeness was to be expected. But that raises the question: Why is a Prime Minister who is so sure-footed on politics so unadventurous in economics?
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by khatvaanga »

Is the majority in RS for freeing the labour and land?
Suraj
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Suraj »

khatvaanga wrote:Is the majority in RS for freeing the labour and land?
Please stop bringing political discussions here . You’ve done so multiple times in the past month .
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by chaitanya »

I feel that many posts in the past few pages have been discussing either the negative sentiment surrounding the budget, how the economy is ailing (and failing), and how India will be unable to grow to meet the 5T mark that has been set. Are there any raw metrics to support these dismal statements?

I found some data quickly (don't know how accurate it is, claims to be from MOSPI, etc) from a site called trading economics. Seems like the current numbers for nearly all metrics below are in line with what occurred during Modi 1.0. Given that Modi 1.0 was successful on the economic front what justification is there for this sentiment? Am I missing something? Also, isn't there a strong anti-correlation between economic growth and election cycles? Has that been properly factored in these analyses? To me it seems like mass hysteria being generated, but happy to be corrected...

(please hit the max button under the graph to see long-term trends)
IIP
Services PMI
Manufacturing PMI
Composite PMI
Business Confidence
Consumer Spending
Cement Production
Steel Production
vijayk
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by vijayk »

chaitanya wrote:I feel that many posts in the past few pages have been discussing either the negative sentiment surrounding the budget, how the economy is ailing (and failing), and how India will be unable to grow to meet the 5T mark that has been set. Are there any raw metrics to support these dismal statements?

I found some data quickly (don't know how accurate it is, claims to be from MOSPI, etc) from a site called trading economics. Seems like the current numbers for nearly all metrics below are in line with what occurred during Modi 1.0. Given that Modi 1.0 was successful on the economic front what justification is there for this sentiment? Am I missing something? Also, isn't there a strong anti-correlation between economic growth and election cycles? Has that been properly factored in these analyses? To me it seems like mass hysteria being generated, but happy to be corrected...

(please hit the max button under the graph to see long-term trends)
IIP
Services PMI
Manufacturing PMI
Composite PMI
Business Confidence
Consumer Spending
Cement Production
Steel Production
Good find. Pretty consistent over 5 years
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by anmol »

Seems like the current numbers for nearly all metrics below are in line with what occurred during Modi 1.0. Given that Modi 1.0 was successful on the economic front what justification is there for this sentiment? Am I missing something?
Maharashtra, Haryana and Delhi elections.
chaitanya
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by chaitanya »

Thanks, makes sense!
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by khatvaanga »

Suraj wrote:
khatvaanga wrote:Is the majority in RS for freeing the labour and land?
Please stop bringing political discussions here . You’ve done so multiple times in the past month .
Apologies Suraj ji. Will not do it again.
Rahulsidhu
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Rahulsidhu »

In the US, a new way of thinking about economics and money is gaining popularity, known as Modern Monetary Theory. It is now going international.

https://www.bloomberg.com/news/articles ... nd=premium
One of MMT’s core arguments is that a country that owes money in its own currency doesn’t have to worry about running up big debts because it can always print more money to cover them. The only constraint on government spending in MMT theory is the risk of overheating the economy and causing inflation.
Expect this to reach Indian shores soon, especially if the economic downturn persists. New ideas are desperately needed.
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Dumal »

Is this just kite-flying or are we seriously tracking back on the plan to issue foreign currency bonds?

https://www.reuters.com/article/india-b ... SL4N24Q2W5

UPDATE 1-India PM's office wants finmin to restudy issuing overseas sovereign bond - sources
By Aftab Ahmed and Manoj Kumar

NEW DELHI, July 25 (Reuters) - The Indian Prime Minister’s Office (PMO) wants the finance ministry to reassess the idea of issuing foreign currency overseas sovereign bonds, two sources with knowledge of the development said on Thursday. The office has asked the finance ministry to seek wider consultation from stakeholders before proceeding with any plans, said the sources, who declined to be identified as they were not authorised to speak to the media.

The Ministry of Finance and the PMO declined to comment on the matter. This month, Finance Minister Nirmala Sitharaman said in her budget speech that India would look to issue overseas foreign currency sovereign bonds.

The idea, however, has been criticised by former heads of the Reserve Bank of India, economists and allies of the ruling Bharatiya Janata Party alike, as they argued it could create long-term economic risks by exposing the government’s liabilities to currency fluctuations.

The benchmark 10-year bond yield rose as much as 11 basis points to 6.55% after the news of a rethink of the proposal, as market participants fear this may boost government borrowing in the domestic market.

The PMO was not properly apprised of the consequences of overseas dollar-denominated bonds by outgoing finance secretary Subhash Chandra Garg, who originally pushed this idea, said one of the two sources, who is an adviser to the government.

The proposal to raise funds via overseas bonds is likely to be withdrawn, and as an alternative, the government could raise funds through rupee-denominated bonds in the overseas market, he added.

Garg, a high-flying finance ministry bureaucrat, was in a surprise move transferred to the less high-profile power ministry late on Wednesday. Garg was a central figure amid the tension that arose between the government and the RBI in 2018, that culminated with the sudden departure of former RBI governor Urjit Patel in December. It was not immediately clear whether Garg’s transfer was linked to the fallout from the overseas bond proposal, but a third source told Reuters on Thursday that Garg had applied for voluntary retirement after being handed the transfer.

Garg told media later on Thursday that he had sought voluntary retirement, but would serve out a notice period of three months and take charge as power secretary until then. He declined to comment on the sovereign bond issuance. The finance ministry declined to comment on Garg’s transfer, or voluntary retirement application.

(Writing by Swati Bhat; Editing by Euan Rocha and Richard Borsuk)
JayS
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by JayS »

Prasad wrote:That RSN idea is not going to work. States may agree to funding CAPF (if that) but will and shouldn't agree to funding the armed forces. What else is the central government there for?
Question I have is what is stopping GOI to approve roll-on budget for Defense and put all that is unspent in this RSN..? It will build up slowly, but there will be no complications to deal with. They can always do some book keeping magic to budget more than needed so more will remain at the end of the year for RSN..? Of coarse MoF guys wont like it but National Security should take precedence if RSN is so important.
nandakumar
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by nandakumar »

Under the constitutional framework, taxes go into the consolidated fund of India. Monies can be spent only if there is a Parliamentary approval (budget). Unspent sums at the end of the year automatically lapses. The larger philosophical proposition is this. People elect a set of representatives to do such things as they deem fit. At all times these representatives must have the chance to review an earlier decision. This non-lapseable business, constrains them from doing what they think is right in the light of changes in circumstances. The problem becomes all the more acute if there is a change in government from one year to the next. Is it fair to deny them the chance to alter course?
Suraj
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Re: Indian Economy News & Discussion - Nov 27 2017

Post by Suraj »

Dumal wrote:Is this just kite-flying or are we seriously tracking back on the plan to issue foreign currency bonds?

https://www.reuters.com/article/india-b ... SL4N24Q2W5

The proposal to raise funds via overseas bonds is likely to be withdrawn, and as an alternative, the government could raise funds through rupee-denominated bonds in the overseas market, he added.
I hope it's not kite flying and that the latter situation comes to pass. We already have a very successful recent history at offering Rupee denominated bonds, that have been fully subscribed despite multiple rounds of limit increases.

Note that I'm referring to bonds issued in India in Rupees, and NOT 'masala bonds' issued outside the country to foreign investors that are denominated in Rupees.
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