Indian Economy News & Discussion - Nov 27 2017

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

Postby Rahulsidhu » 08 Aug 2019 12:33

A lot has been written recently about how global bond yields are extraordinarily low and this is a golden opportunity for India to issue overseas bonds to take advantage. But I want to propose an alternative hypothesis:

The global bond rally is a decades long secular up-trend, and it is not so much that global yields are too low, it is that Indian yields are too high. RBI repo rate should be ~3% around now, and 10yr GoI bonds should be trading with a 3% handle. In INR.

This would also solve the "fiscal interest payments trap" - around 18% of the budget goes into interest payment on existing stock of borrowings. This is said to be the motivation behind issuing overseas at a low coupon. But if coupons on gov bonds go from 8% to 3%, this would massively reduce the interest burden automatically.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Uttam » 08 Aug 2019 20:29

Regarding transmission of interest rate cuts

I am not a macro-economist, so take my words with spool full of salt:

The rate cut transmission is always smaller. RBI can cut only the short-term rates (Repo, which is almost and overnight rate), whereas most of the banks' assets, i.e. the loans they extend, have long term maturities, typically between 60 days and 10 years. Banks' also give short-term working capital loans, but those are not the preferred loans from banks' perspective, as these have higher costs of operations and are more exposed to reinvestment rate risk. RBI can affect the longer term rates by buying assets from the banks at higher prices, similar to quantitative easing done by Federal Reserve.

Banks depend on short-term current deposits and Fixed deposit to extend longer term loans. For these, they compete with other saving schemes such as Indira Vikas Patra, Kisan Vikas Patra, Postal deposits, PFs, etc. Thus, another way to reduce longer term rates is to reduce rates on these other saving schemes. But these are in control of Central Government like Finance Ministry and Labor ministry and not in control of RBI.

The reduction in short-term rates by RBI have smaller effect, and therefore we see a slight reduction lending rates.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 09 Aug 2019 01:59

Image

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Good news is rainfall is almost normal for the country as a whole. Hope this helps improving the economy and water situation

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 10 Aug 2019 05:46

Re: monetary transmission

Let's say that the banks are unable to cut rates due to their funding costs being too high. What the RBI can do is offer a term repo facility to cheapen bank funding costs - open two or three repo windows (sovereign, quasi-sovereign, corporate) and offer funding up to 6mths or a year.

However, this wont help if the banks are simply taking a commercial call to widen their interest margins at the cost of volume growth. I believer this is the actual case -- loan demand is anyway weak and there is not enough lending competition out there since the NBFCs are down. In this case, simply giving cheaper funding will not be enough (tho it could be done regardless). Some regulatory action will be needed. Remember that RBI is also the banking regulator.

I will also say that cheaper interest rates are good and will help with recovery but the prime mover will be private investment and consumer demand. This can be kickstarted only through fiscal policy.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby tandav » 12 Aug 2019 09:57

Xposted from Infra thread

Most companies in the Real Estate, Construction and Infrastructure sector are deep trouble. Many are defaulting on loan repayments, salary and tax commitments.

The root cause for those in Govt Infra space is beauracratic delay of payments for 6 months or more and frequent political U-turns on awarded contracts which happens everytime govt changes. Root Cause for companies in Real estate is lack of buyers probably due to lack of money supply due to payment delay from Govt projects and unrealistic value demanded. Most of this is coming from hyper inflated value of land which developers have paid to politically connected folks.

https://www.livemint.com/politics/policy/sitharaman-to-assess-tax-harassment-charges-review-csr-default-penalty-1565352516973.html
Everything mentioned in this article has been personally experienced by us in last 6 months 1) tax terrorism (gst official locking out our bank account and garnishing money) 2)payment delay in govt sector to MSME sector is 48000 Cr (last para) we are vendors to infra companies and most have expressed inability to pay us 3) When big companies like L&T are facing losses the situation is more dire for smaller contractors

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 12 Aug 2019 16:47

https://economictimes.indiatimes.com/ne ... 636196.cms
ET Exclusive: Will make India a better place to do business, says PM Modi
The government's vision for the next five years is to have investment-led growth in the country.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 12 Aug 2019 19:39

https://www.livemint.com/companies/news ... 61411.html

While the FDI is obviously good news, a question worth asking is: why does India's top, highly ambitious business group, investing into highly capital intensive industries, feel the need to pare net debt to zero.
It's almost as if debt has become a bad word, and it is not good for growth.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby sudhan » 12 Aug 2019 20:26

Rahulsidhu wrote:https://www.livemint.com/companies/news/aramco-bp-to-help-mukesh-ambani-slash-22-billion-of-reliance-s-debt-1565608961411.html

While the FDI is obviously good news, a question worth asking is: why does India's top, highly ambitious business group, investing into highly capital intensive industries, feel the need to pare net debt to zero.
It's almost as if debt has become a bad word, and it is not good for growth.


The current credit baggage was probably making future credits more expensive. This move would make a lot of lenders very happy..

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 12 Aug 2019 20:30

sudhan wrote:
Rahulsidhu wrote:https://www.livemint.com/companies/news/aramco-bp-to-help-mukesh-ambani-slash-22-billion-of-reliance-s-debt-1565608961411.html

While the FDI is obviously good news, a question worth asking is: why does India's top, highly ambitious business group, investing into highly capital intensive industries, feel the need to pare net debt to zero.
It's almost as if debt has become a bad word, and it is not good for growth.


The current credit baggage was probably making future credits more expensive. This move would make a lot of lenders very happy..


As I understand "net debt down to zero", there will not be much future credits, as you put it.
Why would it make the lenders happy? Was there a serious risk of default? Maybe you know something I don't?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby sudhan » 12 Aug 2019 20:37

As I see it, they will continue borrowing. It is the 'net debt' that they are aiming to bring down to zero not. Which means they aim to

1. Increase the cash reserves
2. Keep the total borrowings below their cash reserve limit

And this borrowing will become cheaper. The lenders were indeed getting uncomfortable about the spending spree on the wireless business.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 12 Aug 2019 20:40

This scheme you have outlined would make them an inverse bank. Sorry, that's not how corporate finance is done.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby yensoy » 12 Aug 2019 20:54

Rahulsidhu wrote:
sudhan wrote:
The current credit baggage was probably making future credits more expensive. This move would make a lot of lenders very happy..


As I understand "net debt down to zero", there will not be much future credits, as you put it.
Why would it make the lenders happy? Was there a serious risk of default? Maybe you know something I don't?


Lenders don't like it if a company is too highly indebted.

Anyway the other side of the coin is that the investor is Aramco, which is not a run-of-the-mill investor. It is a partner, a supplier of inputs, which means that it is in Aramco's benefit to ensure a steady stream of crude supply to Reliance at predictable prices, if it wishes to maximize its investment gains. I think motabhai has played it well; 75B$ won't hurt in this situation, and there are awesome geopolitical benefits. Only downside is that the government may be pushed to avoid Iranian crude.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby jpremnath » 12 Aug 2019 21:18

^^ 75B $ is the enterprise value of RIL petrochem business. The Saudis are buying 20% of it...so net FDI will amount to maybe 15b$. Still a substantial amount...I expect our over enthusiastic tax dept to jump in and spoil the party with some ridiculous demands. But since we are talking about motabhai here, everyone should fall in line...

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Vips » 13 Aug 2019 01:45

Aadhaar enabled transactions cross 200 mn milestone on NPCI platform during July.

The umbrella body for digital transactions, NPCI, on Monday said that Aadhaar enabled Payment System (AePS) crossed the milestone of over 200 million transactions during July this year.

AePS is a bank led model which allows basic interoperable banking transactions at point of sale (PoS or MicroATM) through the business correspondent of any bank by using Aadhaar authentication.

"AePS has become instrumental in driving the financial inclusion program in India. In July 2019, the transaction count of AePS stood at 220.18 million with transaction value Rs 9,685.35 crore, compared to transaction count of 194.33 million and a transaction value of Rs 8,867.33 crore in the month-ago period same year," NPCI said in a release.

A total of 6.65 crore Indian citizens availed banking services through AePS platform in July, it said.

"AePS crossing 200 million transactions mark is a significant achievement for NPCI, benefiting financial inclusion in India. AePS is delivering the 4As' for financial inclusion to rural part of India, authentication of customer, availability of services, accessibility through AePS channel and affordability as it's free of cost to the customers," NPCI COO Praveena Rai said.

AePS empowers a bank customer to use Aadhaar as identity to access respective Aadhaar enabled bank account and perform basic banking transactions like cash withdrawal, intrabank or interbank fund transfer and balance enquiry. The only inputs required for a customer to do an AePS transaction are the name of the customer's bank, Aadhaar number and fingerprint captured during enrollment.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 13 Aug 2019 05:25

https://swarajyamag.com/economy/north-b ... -their-way
North Block Is Listening To Industry Concerns Patiently And Welcome Changes May Be On Their Way

A lot of people have highlighted the issue of growth slowdown, tax terrorism and the need to reduce taxes over the last few days. Consequently, we’re witnessing a lot of activity in the Finance Ministry as different rounds of meetings are taking place with industry representatives on a daily basis to understand their concerns and formulate a plan for the recovery of our growth rate.

Nobody can deny that paying taxes in India is a hassle and similarly nobody can state that India is a tax-friendly country by any stretch of imagination. The reality is that there’s a genuine problem in terms of taxation laws, the enforcement agency and the corresponding compliance or litigation procedures.


The recent amendments to the Companies Act had made non-compliance with CSR a criminal offence and this has created a lot of bad blood. The Finance Minister has clarified since then that non-compliance with CSR will not lead to people being put in jail and this has partially reassured business leaders.

The tax changes with FPIs (Foreign Portfolio Investors) registered as trusts coming under the ambit of surcharges were also instrumental in a sharp reversal of the economic sentiment.

The government has now indicated that it will reconsider its position on this issue. In fact, a roll-back of the changes is being speculated in the media, which is likely to be a major development.

However, this revival of the sentiment is unlikely to address the critical problem of an imminent further slowdown of our growth rate. My forecast for the first quarter is at 5.0-5.4 per cent while for the second quarter it is at 5.2-5.6 per cent.

This is lower than the RBI’s anticipated growth rate for the first half but then again, RBI expects a growth rate of 6.9 per cent for this year, which is highly unlikely.

The problem of the MPC (Monetary Policy Committee) being on a different planet is one that is serious but not a lot can be done by the government on that front.

However, repeated meetings of Finance Minister with representatives from different sectors is likely to help understand different concerns that the industry faces. Only upon understanding these concerns can a strategy be formulated to kick-start our economy --- but time is of essence as half of the financial year is almost over.

It’s easier to revive the sentiments than to revive the growth rates, more so at a time when global growth is slowing.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 13 Aug 2019 06:03

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Uttam » 13 Aug 2019 20:09

In my humble opinion, the short-term rates in India are still too high. The most recent CPI is 3.15% (Source) and the RBI's reverse repo rate is 5.15% (https://www.rbi.org.in/). That works out to be a real short-term interest rate of 2%. I am expecting at least 1 more rate cut before the end of the year.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 14 Aug 2019 10:50

Rahulsidhu wrote:https://www.livemint.com/companies/news/aramco-bp-to-help-mukesh-ambani-slash-22-billion-of-reliance-s-debt-1565608961411.html

While the FDI is obviously good news, a question worth asking is: why does India's top, highly ambitious business group, investing into highly capital intensive industries, feel the need to pare net debt to zero.
It's almost as if debt has become a bad word, and it is not good for growth.


This point made in more detail in this article:

https://www.bloomberg.com/opinion/artic ... ia-economy

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 14 Aug 2019 12:38

Reliance was a net zero debt company before it started investing in Jio. If its growing then, it should be possible to grow now too. It's already killing other telecom companies with its price wars. Any more investments by Reliance, at least in telecom, and the others will have to shut shop.

May be the banks will lower the interest rates if there is no body to take the money returned by Reliance. Till yesterday, we were talking about banks having no money to lend and needing recapitalization. Telecom was also getting to be bad loans. At least some one is paying back money.

Cheap internet for homes and businesses will have its own dynamic and will add to the growth.

If we have to depend on one company for growth, its probably adding more to the imbalance in the economy.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Uttam » 14 Aug 2019 18:07


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Re: Indian Economy News & Discussion - Nov 27 2017

Postby disha » 15 Aug 2019 10:23

Modi announced 100 Lakh Crores investment in infrastructure - that is $1.4 Trillion Dollars. Aim is to take India to $5T economy by 2024.

That is almost 15% y.o.y growth.

That is big big big announcement.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 15 Aug 2019 11:19

disha wrote:Modi announced 100 Lakh Crores investment in infrastructure - that is $1.4 Trillion Dollars. Aim is to take India to $5T economy by 2024.

That is almost 15% y.o.y growth.

That is big big big announcement.


More like 11%. Indian GDP is 3 trillion now. If it has to reach 5 trillion in 5 years, nominal GDP has to grow at 11% in dollar terms. If you count till end of 2024, its more than 5 years of time left. Provided exchange rate is stable it comes to around 7% real growth rate though even that looks difficult right now.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vipins » 15 Aug 2019 15:31

disha wrote:Modi announced 100 Lakh Crores investment in infrastructure - that is $1.4 Trillion Dollars. Aim is to take India to $5T economy by 2024.

That is almost 15% y.o.y growth.

That is big big big announcement.

Another point ticked from BJP Manifesto 2019.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby kit » 15 Aug 2019 15:36

hanumadu wrote:
disha wrote:Modi announced 100 Lakh Crores investment in infrastructure - that is $1.4 Trillion Dollars. Aim is to take India to $5T economy by 2024.

That is almost 15% y.o.y growth.

That is big big big announcement.


More like 11%. Indian GDP is 3 trillion now. If it has to reach 5 trillion in 5 years, nominal GDP has to grow at 11% in dollar terms. If you count till end of 2024, its more than 5 years of time left. Provided exchange rate is stable it comes to around 7% real growth rate though even that looks difficult right now.


I have a lot of hope in India's own internal market to expand with less dependence on Chinese imports. Have faith !.. I do not want to import more from a country that backs the pakis in the UN security council.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karan M » 16 Aug 2019 02:56

I hope India passes a law limiting imports from any org that does extensive business with paki land and it is applied to PRC.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby M_Joshi » 17 Aug 2019 01:18

A big news that has largely gone un-noticed in MSM & Social Media as well :

India's Extreme Poverty rate is below 3% now.
https://worldpoverty.io/index.html

It used to be 7% in 2016, 15% in 2010 & 40% in 2003. Within 2-3 years it will be below 1%. 30-40% is what I've grown up hearing & never imagined it would come down so quickly. Need to work on HDI now to take it above 0.75 by 2025.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Bart S » 17 Aug 2019 02:28

M_Joshi wrote:A big news that has largely gone un-noticed in MSM & Social Media as well :

India's Extreme Poverty rate is below 3% now.
https://worldpoverty.io/index.html

It used to be 7% in 2016, 15% in 2010 & 40% in 2003. Within 2-3 years it will be below 1%. 30-40% is what I've grown up hearing & never imagined it would come down so quickly. Need to work on HDI now to take it above 0.75 by 2025.


Not sure how credible that site is. It also shows Pa^istan as 'below 3%' whereas Indonesia and Philippines who both have a much higher per-capita than India are shown in the problem colours.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby ldev » 19 Aug 2019 21:33

Intriguing analysis by Sonali Ranade on the drivers of the Indian economy over the last 30 years, drivers that created consumption and enabled the economy to grow at the pace that it did. And what the current ailments are. I am not so sure of her observations about the current cleanliness of the bank balance sheets and mixed opinions on the various steps outlined to kick start the economy. Also interesting that the Modi Government now seems to be targeting investment and exports to drive the economy or at least make it less dependent on consumption.

https://threadreaderapp.com/thread/1163 ... 98944.html


Since the reforms of the 90s, there have been 2 main drivers of growth in India if you strip away all the wishful thinking:

1. High paying jobs created by software & services exports. For the first time since independence we found a way to convert skilled labour into Dollars.
2. Migration to urban centres from villages that enable monetisation of agricultural land around urban centres at prices several orders of magnitude than before.


High paying tech jobs triggered drove everything from land prices, housing, white goods, FMCG, etc.
While monetisation of land a huge multiples to existing prices [with no taxes] created a humongous demand for everything ranging from Maggie noodles to cement & steel for low cost housing.

These 2 factors actually reinforced each other through the housing industry.
Simultaneously financialisation of savings vastly expanded the availability of finance for housing that has continued to feed incremental demand for many industries.

So U have 3 major engines of growth. Tech jobs, land monetisation & a derivative from the two - housing.
All 3 have had a long run of expansion over the last 30 years and brought tremendous prosperity to India. But now a few things have changed.

1. The tech boom plateaued over the last 3/4 years. It no longer adds to incremental demand, merely sustains it.
2. Land monetisation was brought to a screeching halt by the ill-advised demonetisation, followed by RERA. Land deals have 10 to 60 counterparts due to fragmented ownership. No study was done how to mitigate such complications. So the sudden change froze land monetisation.


3. Housing is witnessing a part structural & part cyclical slowdown. The cyclical aspect is that we have seen an uninterrupted boom for some 30 years. A consolidation was to be expected.


The structural part is that the boom was made to collapse prematurely by …
.. a concatenation of stupid policy decisions:

[a] freezing land monetisation, not acting on bank recapitalisation early enough and [c] not creating a lender of the last resort for the housing industry & letting the whole creaky, leveraged enterprise run “Ram Bharose.”
So now we have a situation where builders have huge unsold inventories that cannot be monetised at ANY COST.

[b]It is important to understand this a bit. In an earlier era, when builders were not financed by institutions, they went bust when housing market collapsed.
But even in such a collapse, inventory, both finished & in process could be “cleared” a deep discounts to the market in a matter of 12 to 24 months & activity would then restart. With bankers & institutions now reluctant to take losses upfront, this clearing mechanism is kaput.

So without deep institutional reforms, the unsold inventory problem cannot be addressed & the old market driven mechanism for clearing the market cannot work. Further, without a lender of the last resort in housing finance, the shadow banking system cannot be revived.
We need new products that convert our skilled labour into Dollar wages like in the tech industry. Health care, training skilled labour 4 the aviation industry, engineering & accounting services - there are many such ideas that can be explored to replace the tech industry.
We should kick some butts in Nitti Ayog & make them actually study how rural migration to small towns works & the role played by land monetisation in creating jobs at the rural & semi-urban areas through housing, retailing etc.

Tax men need to get real about land monetisation.
Without kick-starting land monetisation there is virtually no way we can restart real growth in the economy.

The financial cycle distress needs 3 simulates steps and they do not need any actual funds outlay to pull off.


1. The banking system is now clean enough???. What it needs is incremental capital to lend. This can be created quite easily by RBI taking down there policy rate by 100 bps at 1 go & letting banks book profits on 5% of the longterm gilt holdings.
The appreciation in the price of long dated gilts, both accumulated due to rate cuts made already & the proposed 100 bps rate cut proposed, will suffice 4 incremental capital.

As far as HFC lender of the last resort is concerned, as I tweeted before, it should be 100% sub of RBI
This needs to money from the central budget. A book keeping entry out of reserves of the RBI, within the RBI will create the subsidiary with the credit of RBI. The lender of the resort can then formulate its own back stop lending/asset purchase rules.
The third prong for financial sector revival is banking licences. The best among the NBFCs should be given banking licences. Govt. may use its extraordinary powers to “encourage” such NBFCs to convert to banks or sell out to others. Most will convert.
The best should also be encouraged to buy out weaker players with financing provided by banks if necessary. Only strong players should be left in the fields. The weaker ones should be bought out by others by creating the right incentives.
None of the measures I have outlined need budgetary outlays. All they need is appropriate policy decisions & some behind the scenes selling to private entrepreneurs.

End tax terrorism. Get real about doing business. She authoritarian solutions. That’s all you need.
And 1 last step. Don’t be stupid & keep 5G spectrum idle. Give away startup 5G spectrum free to existing players only in proportion to existing market share.

That 1 bold, brave policy decision will dispel all the gloom in markets & revive faith in sagacity of policy makers.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 20 Aug 2019 05:41

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 20 Aug 2019 05:57

https://www.financialexpress.com/opinio ... h/1679079/
Can India learn from Vietnam how to manage export-led growth?

As a result of this sustained growth, Vietnam’s exports, which were a mere 6% of India’s in 1960 and 13% in 1990, managed to reach 34% in 2000 and a whopping 75% in 2018; at this rate, within a few years, they could even outstrip India.



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Re: Indian Economy News & Discussion - Nov 27 2017

Postby yensoy » 20 Aug 2019 09:32

The secret isn't really a secret. You need the following:
1. An obedient, productive work force (supported by labour laws)
2. Good infrastructure for logistics and production
3. Decent tax regime, tax breaks
4. Land available for lease or purchase at reasonable rates
5. Public safety, law & order
6. An educated/skilled work force (supported by training)
7. Laws supporting movement of capital
8. Continuity in policies
9. Favourable recovery laws supporting entrepreneurship
10. Worker welfare oriented management

Then draw up a business plan, borrow capital, set up factories, hire workers, connect to the global supply chain and logistics providers and cut the ribbon.

Piecemeal approach won't cut it. Ever-changing policies won't cut it. Work on some long-lead time requirements like logistics/infra has to begin yesterday. Most importantly, we need skilled workers and a management style that looks at workers as a resource whose comfort and training determines productivity, and workers who can look up to management for the value they bring to their lives.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby ragupta » 20 Aug 2019 15:54

There is a need for simplified laws, rules and procedures.
A quick dispute resolution mechanism, with the need to knock at the courts in very rare cases.
Reformed judiciary for quick justice, how come we landed from instant justice in panchayats to all these learned and highly educated folks making people suffer for generations for dispending justice. The courts have become a place for exploitation, extortion and manipulation of justice for victims who knock at its door. this need to change for directing and reducing criminal and crooked mind to productive use. otherwise most people wants to game the system for unfair advantage aka cheating, whether it is chitfunds, manipulating entries in books or avoiding taxes, to family property disputes. there must be clear guidelines and actions to avoid the national talent being locked into these disputes.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby ArjunPandit » 20 Aug 2019 18:18

M_Joshi wrote:A big news that has largely gone un-noticed in MSM & Social Media as well :

India's Extreme Poverty rate is below 3% now.
https://worldpoverty.io/index.html

It used to be 7% in 2016, 15% in 2010 & 40% in 2003. Within 2-3 years it will be below 1%. 30-40% is what I've grown up hearing & never imagined it would come down so quickly. Need to work on HDI now to take it above 0.75 by 2025.

what i find hard to believe is that pakistan is around 1% and india 2.8%

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rishirishi » 21 Aug 2019 03:29

vijayk wrote:https://www.financialexpress.com/opinion/can-india-learn-from-vietnam-how-to-manage-export-led-growth/1679079/
Can India learn from Vietnam how to manage export-led growth?

As a result of this sustained growth, Vietnam’s exports, which were a mere 6% of India’s in 1960 and 13% in 1990, managed to reach 34% in 2000 and a whopping 75% in 2018; at this rate, within a few years, they could even outstrip India.



Image



I have been importing things from China from the late 90's. Been to tens of factories there. I think it is more like slavery put in order. People used to live, work at eat at the factory. Food was simple and they slept in bunk beds.

This was the late 90's and the same conditions up to 2010. I think it has probably improved by now.

Frankly I am not impressed. I think India must find its own model, of inclusive and study growth.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 21 Aug 2019 14:24

https://www.ndtv.com/business/parle-cou ... rt-2088139

India's Largest Biscuit-Maker Parle May Fire Up To 10,000 Amid Slowdown

Market research firm Nielsen said last month that the country's consumer goods industry was losing steam as spending in the rural heartland cools and small manufacturers lose competitive advantages in a slowing economy.

Parle is not the only food product company to have flagged slowing demand.

Varun Berry, managing director of Britannia Industries Ltd, Parle's main competitor, said earlier this month that consumers were "thinking twice" about buying products worth just Rs. 5.

"Obviously, there is some serious issue in the economy," Berry had said on a conference call with analysts.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby nandakumar » 21 Aug 2019 16:10

A_Gupta wrote:https://www.ndtv.com/business/parle-could-lay-off-10-000-workers-amid-slowdown-report-2088139

India's Largest Biscuit-Maker Parle May Fire Up To 10,000 Amid Slowdown

Market research firm Nielsen said last month that the country's consumer goods industry was losing steam as spending in the rural heartland cools and small manufacturers lose competitive advantages in a slowing economy.

Parle is not the only food product company to have flagged slowing demand.

Varun Berry, managing director of Britannia Industries Ltd, Parle's main competitor, said earlier this month that consumers were "thinking twice" about buying products worth just Rs. 5.

"Obviously, there is some serious issue in the economy," Berry had said on a conference call with analysts.

I am not a big consumer of biscuits or for that matter, bread. But am a keen observer of the market place. The technology is not very capital intensive, nor otherwise suited for manufacturing by large scale units. Could it be that the likes of Parle and Britannia for facing tougher competition from medium scale and SSI units? Their complaint that GST at 18% is high is not really valid when viewed against the combined State VAT and excise duty rates which worked out closer to 24%.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Yagnasri » 21 Aug 2019 16:33

The main problem is they are all forced to pay the tax now while earlier they all used to escape paying a not even half of the tax. The model of not paying the taxes and keeping that money as un accounted profit is no longer viable. That is the reason many units are facing very low profits etc. Same with Auto mobile dealers

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby kvraghav » 21 Aug 2019 17:14

I feel all this is because of real estate. Every one is clearing loans with every penny for 10 years due to costly real estate. I asked a friend who was cribbing about gst on cars that will he buy car now if gst was zero. He told no since 80% of his monthly income goes to plot and house loans.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vera_k » 21 Aug 2019 20:21

Yagnasri wrote:The main problem is they are all forced to pay the tax now while earlier they all used to escape paying a not even half of the tax. The model of not paying the taxes and keeping that money as un accounted profit is no longer viable. That is the reason many units are facing very low profits etc. Same with Auto mobile dealers


Are the totality of GST collections higher than the tax collected under the previous tax policy?

If so, then yes we can say that some complaints can be attributed to a history of non-compliance. At the same time, if tax received under GST is higher, then there is flexibility to reduce some of the tax rates. Data to answer this question seems scarce.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Yagnasri » 21 Aug 2019 21:49

Data is scarce because entire earlier tax figures are rubbish, to say the least. Take VAT or state sales tax etc. No one really paid them properly. Now they have to pay. Taxes in fact lower under GST but you have to pay them.


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