Indian Economy News & Discussion - Nov 27 2017

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Mollick.R
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mollick.R » 16 May 2020 00:53

Trade unions to go on strike on May 22 to protest against labour laws suspension

NEW DELHI: Ten central trade unions on Friday gave a call for a nationwide strike on May 22 to protest against the suspension of labour laws by some states during the lockdown period, and also decided to take the matter to International Labour Organization (ILO).

"The joint platform of Central Trade Unions (CTUs) in their meeting held on May 14 , 2020 took note of the critical situation for the working people in the country during the lockdown period and decided to enhance united actions to meet the challenge," a joint statement by 10 CTUs said.
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The ten central trade unions that issued the joint statement are INTUC, AITUC, HMS, CITU, AIUTUC, TUCC, SEWA, AICCTU, LPF and UTUC.

There are 12 CTUs in the country. RSS-backed Bharatiya Mazdoor Sangh has also given a call for nationwide protest against labour laws suspension on May 20.



https://economictimes.indiatimes.com/news/economy/policy/trade-unions-to-go-on-strike-on-may-22-to-protest-against-labour-laws-suspension/articleshow/75759402.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mukesh.Kumar » 16 May 2020 17:21

X Posting from manufacturing dhaga

quote="Mukesh.Kumar"]Breaking news for defense of you haven't seen yet. Major reforms in defence manufacture today

YouTube Live[/quote]

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mukesh.Kumar » 16 May 2020 17:25

X Posting from manufacturing dhaga

Mukesh.Kumar wrote:Breaking news for defense of you haven't seen yet. Major reforms in defence manufacture today

YouTube Live
[/quote]

Here's the details from CNBC Blog
Defence FDI Limit Under Automatic Route Raised; Focus On Local Procurement The government has raised the foreign direct investment limit for defence production under the automatic route to 74 percent from 49 percent. At present The government will also notify a list of weapons and platforms which will not be open for imports. Every year this list will be expanded, the finance minister said. A sep

Read more at: https://www.bloombergquint.com/economy-finance/nirmala-sitharaman-press-conference-live-finance-minister-to-announce-fourth-set-of-economic-measures-today
Copyright © BloombergQuint

India will be developed as a hub of maintenance, repair and overhaul operations both for the private and the defence sector.



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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chola » 16 May 2020 17:58

The only non-goras to really industrialize are the nations of the Far East. The interesting thing all the countries there followed the same model economically.

My colleagues on Wall Street and I had always thought that the Germans were the most (East) Asian of the Europeans but it is the other way around. China, Japan and Korea were following a German model that required an "entire generation" to "make a sacrifice for the nation."

Can and should India do the same?

Not only does one generation need to sacrifice but different parts of the country might need sacrifice more and longer for the rest of the country. For a country of our size, there will be parts needing to sacrifice more but the country as a whole will advance. Our experience would be more like Cheen's than South Korea's.

https://www.eastasiaforum.org/2020/05/16/chinas-erhardian-bargain/

China’s ‘Erhardian Bargain’
16 May 2020

Author: Tristan Kenderdine, Future Risk

The English call it wacky economics, it is at odds with France’s economic philosophy of dirigisme and it has been accused of pushing the European Union into a monetary policy stalemate. Yet German ordoliberalism may have much in common with contemporary economic policy in China.

The German Historical School of economic theory played a huge part in China’s choice of development trajectory and institutions during industrialisation. The economic logic of China’s reform era model was part Friedrich List, part Alexander Hamilton and part Ludwig Erhard. In Germany, this economic logic would evolve to become ordoliberalism.

East Asian economic development has consisted of a series of exercises attempting to emulate the German experience. These attempts include the ‘East Asian miracle’, South Korea’s ‘Miracle on the Han River’, ‘Taiwan’s Miracle’ and ‘China’s economic miracle’. These aphorisms — almost always inadvertently — refer to the original Wirtshaftwunder, the ‘Miracle on the Rhine’ of post-war German reconstruction. But both globalisation and development economics consistently ignore the contribution of the underlying ordoliberal theory to economic development policy.

The model for industrial development in East Asia requires a national economic system in the first instance. State-capitalist industrialisation drives in East Asia were all dependent on a ‘Lewis model’ of converting an unlimited supply of rural labour into labour for urban manufacturing. Under this labour-for-development model, there is generally a window of around 30 years within which states establish the initial institutions of industrialisation before moving into regional and global trading regimes. Indeed, during each of the 30-year industrialisation windows in Germany, Japan, South Korea and Taiwan, an entire generation was forced to make a sacrifice for the nation.

This national sacrifice required a willing supply of labour to be used for a greater utilitarian good. This is one of the key ingredients of the East Asian industrialisation model: a population of labour that undertook generational sacrifice for future national and generational prosperity. Compared with the early European and American industrialisers that used forced labour to achieve this, the East Asian model is better described as ‘coerced labour’.

This sacrifice is often taken as an acceptable trade-off between governments and their populations. In South Korea, for example, the working generation from 1956 to 1979 suffered immense hardships through rapid industrialisation so that the country could modernise. In East Asian economic history, the political legitimacy mechanism underlying this economic growth period could be described as an ‘Erhardian Bargain’ with rural labour.

...

In China, labour sacrifice has been immense and coastal development astonishingly successful. But the hinterland remains poor, rural development has stalled and many parts of rural China lag behind aggregate development. For example, the seven least-developed provinces in China have per capita incomes under US$7000 a year — that is over 238 million people who are far off the OECD income range.

The legitimacy of China’s Erhardian Bargain is now being put to the test as the economic restart post-COVID-19 hits labour in China hard. Many mid-income salary workers are on half-pay or no pay, many rural migrants have returned to the countryside from urban factory work and new graduates and high-skilled workers are facing an impossible leap in 2020 to reach national science and technology industrial policy goals.



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Re: Indian Economy News & Discussion - Nov 27 2017

Postby nandakumar » 16 May 2020 19:48

chola wrote:The only non-goras to really industrialize are the nations of the Far East. The interesting thing all the countries there followed the same model economically.

My colleagues on Wall Street and I had always thought that the Germans were the most (East) Asian of the Europeans but it is the other way around. China, Japan and Korea were following a German model that required an "entire generation" to "make a sacrifice for the nation."

Can and should India do the same?

Not only does one generation need to sacrifice but different parts of the country might need sacrifice more and longer for the rest of the country. For a country of our size, there will be parts needing to sacrifice more but the country as a whole will advance. Our experience would be more like Cheen's than South Korea's.

https://www.eastasiaforum.org/2020/05/16/chinas-erhardian-bargain/

China’s ‘Erhardian Bargain’
16 May 2020

Author: Tristan Kenderdine, Future Risk

The English call it wacky economics, it is at odds with France’s economic philosophy of dirigisme and it has been accused of pushing the European Union into a monetary policy stalemate. Yet German ordoliberalism may have much in common with contemporary economic policy in China.

The German Historical School of economic theory played a huge part in China’s choice of development trajectory and institutions during industrialisation. The economic logic of China’s reform era model was part Friedrich List, part Alexander Hamilton and part Ludwig Erhard. In Germany, this economic logic would evolve to become ordoliberalism.

East Asian economic development has consisted of a series of exercises attempting to emulate the German experience. These attempts include the ‘East Asian miracle’, South Korea’s ‘Miracle on the Han River’, ‘Taiwan’s Miracle’ and ‘China’s economic miracle’. These aphorisms — almost always inadvertently — refer to the original Wirtshaftwunder, the ‘Miracle on the Rhine’ of post-war German reconstruction. But both globalisation and development economics consistently ignore the contribution of the underlying ordoliberal theory to economic development policy.

The model for industrial development in East Asia requires a national economic system in the first instance. State-capitalist industrialisation drives in East Asia were all dependent on a ‘Lewis model’ of converting an unlimited supply of rural labour into labour for urban manufacturing. Under this labour-for-development model, there is generally a window of around 30 years within which states establish the initial institutions of industrialisation before moving into regional and global trading regimes. Indeed, during each of the 30-year industrialisation windows in Germany, Japan, South Korea and Taiwan, an entire generation was forced to make a sacrifice for the nation.

This national sacrifice required a willing supply of labour to be used for a greater utilitarian good. This is one of the key ingredients of the East Asian industrialisation model: a population of labour that undertook generational sacrifice for future national and generational prosperity. Compared with the early European and American industrialisers that used forced labour to achieve this, the East Asian model is better described as ‘coerced labour’.

This sacrifice is often taken as an acceptable trade-off between governments and their populations. In South Korea, for example, the working generation from 1956 to 1979 suffered immense hardships through rapid industrialisation so that the country could modernise. In East Asian economic history, the political legitimacy mechanism underlying this economic growth period could be described as an ‘Erhardian Bargain’ with rural labour.

...

In China, labour sacrifice has been immense and coastal development astonishingly successful. But the hinterland remains poor, rural development has stalled and many parts of rural China lag behind aggregate development. For example, the seven least-developed provinces in China have per capita incomes under US$7000 a year — that is over 238 million people who are far off the OECD income range.

The legitimacy of China’s Erhardian Bargain is now being put to the test as the economic restart post-COVID-19 hits labour in China hard. Many mid-income salary workers are on half-pay or no pay, many rural migrants have returned to the countryside from urban factory work and new graduates and high-skilled workers are facing an impossible leap in 2020 to reach national science and technology industrial policy goals.


I am not sure this article is of much help to India. It is sketchy on the aspect of labour sacrifice. What is the nature of thus sacrifice? Is it subsistence wages or long hours of work? Not sure. There is just this sentence in the context of South Korea. It says:
"In South Korea, for example, the working generation from 1956 to 1979 suffered immense hardships through rapid industrialisation so that the country could modernise. "
But there is not much else.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chola » 16 May 2020 20:05

nandakumar wrote:I am not sure this article is of much help to India. It is sketchy on the aspect of labour sacrifice. What is the nature of thus sacrifice? Is it subsistence wages or long hours of work? Not sure. There is just this sentence in the context of South Korea. It says:
"In South Korea, for example, the working generation from 1956 to 1979 suffered immense hardships through rapid industrialisation so that the country could modernise. "
But there is not much else.


Kumar ji, you are correct on the lack of specifics but it basically comes down to this: low wages, long hours, low or no social safety net and intervention for industry instead of against industry when issues of health/enviroment comes into play (so there is welfare sacrifice as well.)

In India's case, this means we need to be pro-industry to the point of being anti-union, actively husband critical industries -- do not stop them from acquiring land and resources grow even at the expense of poor villagers, protecting promising firms when the inevitable industrial accidents occur and, yes, allowing cheap labor under often times exploitive conditions (low wages and long hours) that allow nascent industriest to survive birth.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby syam » 16 May 2020 21:00

india is already 3 trillion dollar economy. why do we have to follow japan, korea or china at this stage?

TN,KA,AP+TG,MH,GJ are already doing great. what we need is to expand the industry in other parts of the country and kick start the growth there too.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mort Walker » 16 May 2020 23:11

syam wrote:india is already 3 trillion dollar economy. why do we have to follow japan, korea or china at this stage?

TN,KA,AP+TG,MH,GJ are already doing great. what we need is to expand the industry in other parts of the country and kick start the growth there too.


No. Per capita incomes are still too low any way you look at in PPP or USD. The model toward industrialization will have to follow one which favors manufacturing as it provides the most employment and raises incomes across the country. This manufacturing industry puts assets in place which don't go away so easily. Service industry is important, but puts too much wealth in the hands of too few.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Vivek K » 16 May 2020 23:13

We should follow those models adapted to our situation. We will do ourselves a huge favor by modernizing labor laws - even though that is unpopular. Labor courts should be rationalized and decision making should focus on keeping the industry running.

Divert electric power to industries if we cannot build powerplants for all. The present choice is for industries to make huge initial and recurring investment in independent alternative sources of power - i.e. Diesel Generating sets as standby power sources. This is unnecessary burden on industries that compete globally where industries do not need to make this investment. Private Captive power plants of 25-50 MW size should be allowed in each industrial area with a fixed return assured based on uptime.

Indian companies should get money at rates similar to companies in Japan and South Korea.

Farmers should be asked to pay taxes same as industries and also pay for power at the same price as industries. If a state wants to give freebies, it should require a vote of the people and not a politician's selfish decision. When a state chooses to lose money like that, it should provide a funding mechanism for this freebie - additional taxation on that state's population. No government - GOI or any state government should be allowed to invest in social programs without tying up a method to pay for these programs. For example the largess by the current government on the farm sector should be paid for by the farm sector through taxation. This burden should not be transferred to the industrial sector - in other words, GOIs should not be able to have their cake and eat it too.

Current GOI has not provided any incentives for industry - it should provide some schemes for industries too.
Last edited by Vivek K on 16 May 2020 23:25, edited 1 time in total.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby yensoy » 16 May 2020 23:17

syam wrote:india is already 3 trillion dollar economy. why do we have to follow japan, korea or china at this stage?
TN,KA,AP+TG,MH,GJ are already doing great. what we need is to expand the industry in other parts of the country and kick start the growth there too.


Add to it Delhi and surroundings which is a huge economic magnet (even outside of government sectors) for all of northern, central and eastern India. We really need to decongest the entire country. Industries, especially low tech labour intensive industries, should be scaled out throughout the length and breadth of the country especially the labour surplus states. There is little point in government led big industry like rail loco or fighter aircraft component manufacturing being parachuted into highly backward areas - this hasn't led to the development of local ancillary units instead just makes it harder to do business; otoh they can be located in non-traditional hubs/towns as a staged means of spreading prosperity.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chola » 17 May 2020 00:21

syam wrote:india is already 3 trillion dollar economy. why do we have to follow japan, korea or china at this stage?

TN,KA,AP+TG,MH,GJ are already doing great. what we need is to expand the industry in other parts of the country and kick start the growth there too.


It is the level of industrialization both quantilative for the country and qualitative through your ability to win global share, Syam ji.

Just a quick look up for the quantilative side of things by proportion of the gross national product.

India:
GDP by sector
Agriculture: 15.4%
Industry: 23%
Services: 61.5%

Germany:
GDP by sector
agriculture: 0.7%
industry: 30.7%
services: 68.6%

South Korea:
GDP by sector
agriculture: 2.2%
industry: 39.3%
services: 58.3%

China:
GDP by sector
Agriculture: 7.9%
Industry: 40.5%
Services: 51.6%

Qualitative would be best look at from the share of the global bellweather manufactures:

Autos:
China: 27m
US: 11m
Japan: 10m
India: 5m

Aerospace:
United States: $408.4 Bn (49%)
France: $69 Bn (8.2%)
China: $61.2 Bn (7.3%)
United Kingdom: $48.8 Bn (5.8%)
Germany: $46.2 Bn (5.5%)
Russia: $27.1 Bn (3.2%)

Shipbuilding:
Rank Country Completed Gross tonnage in 2018 (thousands)
1 South Korea 49,600
2 China 43,900
3 Japan 13,005

Electronics:
China $1,551.7B
U.S. $575.1B
Japan $286.3B
South Korea $177.4B

The fact is India is still too dependent on the monsoon and we are completely missing most of the driving industries of the modern age save for automotives. We are not industrialized. At least not to the same extent as the West and the Far East.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby arvin » 17 May 2020 08:03

Wow chola ji. Thanks for posting. Even a small chunk of Aerospace, Shipbuilding and Electronics jobs come here what a difference it would make to economy.
Regarding Aero, its risky to put everything specially civil aircrafts in HAL's basket. We need a consortium of private and public compNies on lines of Airbus to manufacture Civil Aircraft.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby mukkan » 17 May 2020 08:23

It took 25-30 years for these Asian countries with very patriotic hardworking people ready to sacrifice and very favorable western countries aid or business climate of outsourcing manufacturing for low cost and to reduce pollution. China which is closer to India in many terms took 25-30 years with single party rule, very favorable labor and land laws. For India, with democracy, multiparty coalitions, 1000s of localized interest groups, unfriendly labor and land laws, it may take 2-3x of that to reach that level of industrialization.

[quote="chola"] China, Japan and Korea were following a German model that required an "entire generation" to "make a sacrifice for the nation."

Can and should India do the same?

Not only does one generation need to sacrifice but different parts of the country might need sacrifice more and longer for the rest of the country. For a country of our size, there will be parts needing to sacrifice more but the country as a whole will advance. Our experience would be more like Cheen's than South Korea's.

https://www.eastasiaforum.org/2020/05/16/chinas-erhardian-bargain/
[quote]

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby nandakumar » 17 May 2020 11:28

chola wrote:
nandakumar wrote:I am not sure this article is of much help to India. It is sketchy on the aspect of labour sacrifice. What is the nature of thus sacrifice? Is it subsistence wages or long hours of work? Not sure. There is just this sentence in the context of South Korea. It says:
"In South Korea, for example, the working generation from 1956 to 1979 suffered immense hardships through rapid industrialisation so that the country could modernise. "
But there is not much else.


Kumar ji, you are correct on the lack of specifics but it basically comes down to this: low wages, long hours, low or no social safety net and intervention for industry instead of against industry when issues of health/enviroment comes into play (so there is welfare sacrifice as well.)

In India's case, this means we need to be pro-industry to the point of being anti-union, actively husband critical industries -- do not stop them from acquiring land and resources grow even at the expense of poor villagers, protecting promising firms when the inevitable industrial accidents occur and, yes, allowing cheap labor under often times exploitive conditions (low wages and long hours) that allow nascent industriest to survive birth.

You are right. I did some research. Park Chung He assumed power in a military coup in 1960. Military rule lasted till 1990, a good 30 year period. That certainly would have helped to bring about discipline among the working class.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby suryag » 17 May 2020 21:03

Gurus here, what is your view on the set of reforms unleashed during the last couple of weeks. I believe they address a few structural issues, can someone please provide deeper insight into the impact of these reforms. One annoying last question, had CovID not happened what could have been the timeline for rollout of these reforms.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rishirishi » 18 May 2020 04:08

suryag wrote:Gurus here, what is your view on the set of reforms unleashed during the last couple of weeks. I believe they address a few structural issues, can someone please provide deeper insight into the impact of these reforms. One annoying last question, had CovID not happened what could have been the timeline for rollout of these reforms.


labour law is only a small part of the puzzle. It matters more for low end manufacturing. The labor protection laws that are in place, are basic. Below i list the issues that i think are important.

1 A working legal system.
Without a legal systems the complexities and costs grow. Example, If a builder can has a genuine possibility to sue vendors for shoddy work, it would be simpler and easier for him to operate. Likewise if the customers could sue builders, the builders would become more careful. A good framework with sensible regulation is a must. In Germany a tiler must have a proper certificate which takes 3-4 years to get (he has to prove himself in a practical test). In India you get everyone competing for price and delivering crap.

2
Government policies must be predicable and sensible.

3
Government needs to crate a framework for good education. Indian education overly focus on mugging capacity, rather then skill development. Some tips, teachers should be required to have the proper teaching education. Guidelines should be set for number of student to teacher ratio. Vocational training institutes must be strengthen.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 18 May 2020 09:38

The East Asian case wasn’t quite built on low wages in the classical sense . Sure wages were low compared to developed countries, but what was more critical was forced savings and economic structure favoring investment into growth . Private consumption and the import of finished goods for private consumption, were restricted. This was to force people to bank their pay. The banked money in banks got invested in industrial growth. Simultaneously, markets were sheltered from imports - particularly the auto market in the case of Japan and Korea. However this wasn’t autarkic. It was made very clear that the domestic makers had to produce exportable goods and could not sit back and peddle ancient technology to a captive domestic market.

I’ve acquaintances among Taiwanese whose parents were the 60s/70s generation. I asked them (with the help of translation by the friend) how hard those times were . Yes it was hard in the sense of working a lot, not having much to spend on ... Taiwan perhaps wasn’t as brutal as Korea , but examples are - purchase of cosmetics was discouraged and heavily taxed. Spending on leisure in general was taxed, including tourism. However, food supplies were safeguarded and inflation in food prices kept under strict management, with supply, quantity and quality all rising very quickly. The government was very serious about ensuring that access to food was universal, and that means rice, veggies, meat and seafood. The only consumption not heavily taxed were local alcohol and ciggies, deliberately chosen to give the population a chance to get the edge off after a hard day.

So as the old man said as he handed me a drink, those days were long and hard and they knew it. BUT they were also aware of the trade off being offered - a steady and growing income for an increasingly large swath of people who found work , with access to training offered easily. Very clear government emphasis on food security - not just basic items but really a good hearty plate everyday, and regular and clear messaging from the government on the movement upwards on many measures that the government used as a barometer. SoKo famously had regular news updates on growing per capita income benchmarking their rise.

It’s not accurate to say ‘you can’t force a generation to sacrifice’. Sure you can. To do it you have to have a very effective administrative system that clearly tells people ‘yes we understand we have deliberately made labour hard, but we are doing so to rapidly get rich. We promise you you won’t starve. We promise you’ll get to work and earn and income, but that workload will be heavy. We will constantly demonstrate how effectively these are working and how quickly your generation is building wealth. There will be some economic cycles but we guarantee that on the whole you’ll see yourself getting wealthier almost year after year’.

This was the social contract that was in force in those countries. For about 20 years a generation slogged hard, but the thing is, they were protected with their basic needs met very clearly - food, shelter, healthcare and insurance, education and training... all these were covered and the other side of the compact was the expectation of hard work.

My friend had tears in her eyes as her dad recounted those years (she said later he doesn’t talk about it much). This was 10+ years ago. When he was a teen the country was a poor basketcase, but as he said in satisfaction over the drink, ‘I am in my 60s and Taiwan is a wealthy country now’. I offered him another toast to that.

That was their trade off. There’s another side to making labour work hard for a generation - you need a credible government whom the population believes and sees that it looks after all their basic needs. You cannot make people work hard if they go home and starve at night. You need to think carefully, ensure all basic needs are offered, some measure or leisure or a way to take the effect of labour off, and ask them for hard work with rewards made visible (even if it’s just money in the bank prevented from being splurged on goods), and a sense of competition that shows people they’re rapidly getting better off.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby nachiket » 18 May 2020 11:39

I am amused by the original question about whether one generation in India should sacrifice for the future. Only young upper-middle and upper class Indians who grew up in a big city could ask such a question. The reason being our prior generations (yes plural) have already made the kind of sacrifices which are being talked about and a whole lot more. Please ask anyone who was of working age in the 60's and 70's about what kind of sacrifices they had to make on a daily basis in an era of eternal scarcity including food.

Consumption being heavily taxed and discouraged has been a reality in India for a long time, only improving from the 90's onwards. For god's sake even getting a simple landline telephone or Bajaj scooter used to be an achievement not so long ago for most people.

Labor being forced to work with low wages and no little to no safety rules happens even today, all the time especially in the unorganized sector.

Only difference between us and the East Asians is they had a plan to fix things for later generations and the sacrifices made were part of that plan which eventually bore fruit. We never had a plan. Our people suffered without much gain. Whatever improvement we have seen since the 90's would have happened anyway after our economic policies changed. It wasn't built on the sacrifices of our parents and grandparents. They suffered for no reason and could have been avoided if we had chosen better leaders.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 18 May 2020 11:58

That’s correct - the East Asians had an effective administration that had a working social contract in place that they delivered on , in exchange for the work that a generation put in . They also focused on ensuring that the labour pool at least received all basic needs without question - access to quantity and quality of food without crippling inflation, medicines and healthcare, education and skills training , and more .

This was their social contract - a range of provided needs but a range of restrictions on ‘wasteful’ consumption as they saw it, and in return for that progressive measurable increase in living standards within the working life of one generation.

Implement a social contract where people believe the leadership is leading them to higher prosperity, and you’ll see India growing the same .

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chola » 18 May 2020 14:45

Suraj wrote:The East Asian case wasn’t quite built on low wages in the classical sense . Sure wages were low compared to developed countries, but what was more critical was forced savings and economic structure favoring investment into growth . Private consumption and the import of finished goods for private consumption, were restricted. This was to force people to bank their pay. The banked money in banks got invested in industrial growth. Simultaneously, markets were sheltered from imports - particularly the auto market in the case of Japan and Korea. However this wasn’t autarkic. It was made very clear that the domestic makers had to produce exportable goods and could not sit back and peddle ancient technology to a captive domestic market.

I’ve acquaintances among Taiwanese whose parents were the 60s/70s generation. I asked them (with the help of translation by the friend) how hard those times were . Yes it was hard in the sense of working a lot, not having much to spend on ... Taiwan perhaps wasn’t as brutal as Korea , but examples are - purchase of cosmetics was discouraged and heavily taxed. Spending on leisure in general was taxed, including tourism. However, food supplies were safeguarded and inflation in food prices kept under strict management, with supply, quantity and quality all rising very quickly. The government was very serious about ensuring that access to food was universal, and that means rice, veggies, meat and seafood. The only consumption not heavily taxed were local alcohol and ciggies, deliberately chosen to give the population a chance to get the edge off after a hard day.

So as the old man said as he handed me a drink, those days were long and hard and they knew it. BUT they were also aware of the trade off being offered - a steady and growing income for an increasingly large swath of people who found work , with access to training offered easily. Very clear government emphasis on food security - not just basic items but really a good hearty plate everyday, and regular and clear messaging from the government on the movement upwards on many measures that the government used as a barometer. SoKo famously had regular news updates on growing per capita income benchmarking their rise.

It’s not accurate to say ‘you can’t force a generation to sacrifice’. Sure you can. To do it you have to have a very effective administrative system that clearly tells people ‘yes we understand we have deliberately made labour hard, but we are doing so to rapidly get rich. We promise you you won’t starve. We promise you’ll get to work and earn and income, but that workload will be heavy. We will constantly demonstrate how effectively these are working and how quickly your generation is building wealth. There will be some economic cycles but we guarantee that on the whole you’ll see yourself getting wealthier almost year after year’.

This was the social contract that was in force in those countries. For about 20 years a generation slogged hard, but the thing is, they were protected with their basic needs met very clearly - food, shelter, healthcare and insurance, education and training... all these were covered and the other side of the compact was the expectation of hard work.

My friend had tears in her eyes as her dad recounted those years (she said later he doesn’t talk about it much). This was 10+ years ago. When he was a teen the country was a poor basketcase, but as he said in satisfaction over the drink, ‘I am in my 60s and Taiwan is a wealthy country now’. I offered him another toast to that.

That was their trade off. There’s another side to making labour work hard for a generation - you need a credible government whom the population believes and sees that it looks after all their basic needs. You cannot make people work hard if they go home and starve at night. You need to think carefully, ensure all basic needs are offered, some measure or leisure or a way to take the effect of labour off, and ask them for hard work with rewards made visible (even if it’s just money in the bank prevented from being splurged on goods), and a sense of competition that shows people they’re rapidly getting better off.


Great post, Suraj ji. It is a "social contract" between the state and its people that you described in Taiwan. It is the same term they use in Cheen.

Success in advancing the country also allows later reforms to be taken by the state with greater confidence and acceptance by the people. We are tracking advent of a new sets of land reforms in Cheen.
https://amp.scmp.com/economy/china-economy/article/3084607/coronavirus-could-chinas-rural-land-reform-plan-unleash-new


Chinese reformers are urging the government to push forward with a long-awaited rural land reform plan they argue will unleash growth, as the coronavirus pandemic and disputes with major trading partners reshape the economic environment. Some observers believe land reform will provide the world’s second largest economy with a boost in the way that housing privatisation did in 1998 and China’s ascension into the World Trade Organisation did in 2001.



The Wuhan virus must be the greatest catalyst of change for the entire global economy since WWII.

India's farm and labor reforms are good steps but everyone else is changing as well.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby kit » 18 May 2020 16:36

chola wrote:
Suraj wrote:The East Asian case wasn’t quite built on low wages in the classical sense . Sure wages were low compared to developed countries, but what was more critical was forced savings and economic structure favoring investment into growth . Private consumption and the import of finished goods for private consumption, were restricted. This was to force people to bank their pay. The banked money in banks got invested in industrial growth. Simultaneously, markets were sheltered from imports - particularly the auto market in the case of Japan and Korea. However this wasn’t autarkic. It was made very clear that the domestic makers had to produce exportable goods and could not sit back and peddle ancient technology to a captive domestic market.

I’ve acquaintances among Taiwanese whose parents were the 60s/70s generation. I asked them (with the help of translation by the friend) how hard those times were . Yes it was hard in the sense of working a lot, not having much to spend on ... Taiwan perhaps wasn’t as brutal as Korea , but examples are - purchase of cosmetics was discouraged and heavily taxed. Spending on leisure in general was taxed, including tourism. However, food supplies were safeguarded and inflation in food prices kept under strict management, with supply, quantity and quality all rising very quickly. The government was very serious about ensuring that access to food was universal, and that means rice, veggies, meat and seafood. The only consumption not heavily taxed were local alcohol and ciggies, deliberately chosen to give the population a chance to get the edge off after a hard day.

So as the old man said as he handed me a drink, those days were long and hard and they knew it. BUT they were also aware of the trade off being offered - a steady and growing income for an increasingly large swath of people who found work , with access to training offered easily. Very clear government emphasis on food security - not just basic items but really a good hearty plate everyday, and regular and clear messaging from the government on the movement upwards on many measures that the government used as a barometer. SoKo famously had regular news updates on growing per capita income benchmarking their rise.

It’s not accurate to say ‘you can’t force a generation to sacrifice’. Sure you can. To do it you have to have a very effective administrative system that clearly tells people ‘yes we understand we have deliberately made labour hard, but we are doing so to rapidly get rich. We promise you you won’t starve. We promise you’ll get to work and earn and income, but that workload will be heavy. We will constantly demonstrate how effectively these are working and how quickly your generation is building wealth. There will be some economic cycles but we guarantee that on the whole you’ll see yourself getting wealthier almost year after year’.

This was the social contract that was in force in those countries. For about 20 years a generation slogged hard, but the thing is, they were protected with their basic needs met very clearly - food, shelter, healthcare and insurance, education and training... all these were covered and the other side of the compact was the expectation of hard work.

My friend had tears in her eyes as her dad recounted those years (she said later he doesn’t talk about it much). This was 10+ years ago. When he was a teen the country was a poor basketcase, but as he said in satisfaction over the drink, ‘I am in my 60s and Taiwan is a wealthy country now’. I offered him another toast to that.

That was their trade off. There’s another side to making labour work hard for a generation - you need a credible government whom the population believes and sees that it looks after all their basic needs. You cannot make people work hard if they go home and starve at night. You need to think carefully, ensure all basic needs are offered, some measure or leisure or a way to take the effect of labour off, and ask them for hard work with rewards made visible (even if it’s just money in the bank prevented from being splurged on goods), and a sense of competition that shows people they’re rapidly getting better off.


Great post, Suraj ji. It is a "social contract" between the state and its people that you described in Taiwan. It is the same term they use in Cheen.

Success in advancing the country also allows later reforms to be taken by the state with greater confidence and acceptance by the people. We are tracking advent of a new sets of land reforms in Cheen.
https://amp.scmp.com/economy/china-economy/article/3084607/coronavirus-could-chinas-rural-land-reform-plan-unleash-new


Chinese reformers are urging the government to push forward with a long-awaited rural land reform plan they argue will unleash growth, as the coronavirus pandemic and disputes with major trading partners reshape the economic environment. Some observers believe land reform will provide the world’s second largest economy with a boost in the way that housing privatisation did in 1998 and China’s ascension into the World Trade Organisation did in 2001.



The Wuhan virus must be the greatest catalyst of change for the entire global economy since WWII.

India's farm and labor reforms are good steps but everyone else is changing as well.


Every one does not have Indias market size., internal growth can be significant as imports of consumer goods and electronics come down

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Vamsee » 18 May 2020 20:59

Chola & Suraj,

Thank you both for the stimulating discussion. It is very frustrating to see how utterly obvious the path for prosperity is and yet we as a nation prefer political grandstanding, Create laws as if we are rich Scandinavian countries. Glorify rural agrarian subsistence existence rather than rapidly pulling people to urban industrial areas :-(

All we had to do was create SEZs with tall residential towers for workers, excellent schools & hospitals for their children. The expense to run those would be shared by all companies operating in that SEZ. In return demand no disruptions/dharnas. 6 days a week/12 hours per day work. Ironically if done right, those who live in those SEZ bubbles would be enjoying first world facilities before rest of the country can be built to first world standards!

--Vamsee

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 18 May 2020 21:34

It is rather annoying when people say the East Asian system works because they are sheeple and the governments were totalitarian and could have you taken out and shot etc. This is missing the point. You DO need a social compact that is effective. You can accomplish it with a strong democratically elected administration just as well as you can do it with a dictator. The main requirement is not totalitarianism, but rather that that government is able to execute policy without hindrance (even if the policymaking requires buy-in from others), and offers visible rewards that give them legitimacy. This still requires work to ensure a very focused set of policies are implemented and administered effectively.

This rapid growth phase cannot happen when there exists widespread desperate poverty, where people simply survive day to day, without access to food, shelter and the basic tier of Maslows hierarchy. The government has to ensure that is largely eliminated, immediately. Access to food cannot be a constraint. Even the older gen Koreans and Taiwanese aren't scrawny and malnourished, and that is because the 'hard work generation' got access to good food cheaply - that was a fundamental policy mandate. So was sanitation, basic healthcare, education and skills training.

Singapore build perfectly decent and well thought out HDB flats to ensure shelter needs were met - they even deliberately ensured that those towers had mixed ethnic groups so there would be no ghettoization. Taiwan could have just been a TSP or NoKo like garrison state forever pointing to PRC to spend on military, but they were much smarter. SoKo could have spent all its time wailing about having been screwed over by China and Japan, but they happily took money and technology from Japan (Pohang Steel Co, aka POSCO, was founded with Nippon Steel technology and Japanese aid).

Until the mid 2010s, India still had widespread desperate poverty. More than half of rural India had no access to really basic things like sanitation and shelter, or food. One cannot compel a population to work hard unless they bend over backwards to ensure the population sees the side of the social contract that offers their basic needs. The East Asians focused on fixing the desperate poverty quickly, first thing. Seoul in the early 1960s looked no different from Dharavi. Even China largely sorted this out by the 1990s.

Everyone from Chiang-Ching Kuo to Park Chung Hee to Deng Xiaoping and Lee Kuan Yew put their necks on the line by offering a lot of basic carrots even as they denied people organic artisanal hipster carrots, while holding a stick. The stick is not a requirement - you can get the same result from a democratic leader that people give a mandate to, and whom they repose adequate trust that he gets their concerns and is working hard to solve their problems. India has arguably had only two leaders with this kind of backing - the first one and the current one (though the politics of that are not for this thread).

In order for India to do these things, it was necessary to ensure that the basic quality of life of the population was beyond desperate poverty. It's why 2014-2019 saw so much effort to raise the bottom of the society up to a reasonable level, but not so much focus on big bang reforms. The efforts of those five years were offered legitimacy via GE2019, and now we have phase 2 with increasingly more compelling reform measures. These efforts were stalled for decades because the first attempt to do so yielded no lasting gains to offset the pains that the population faced, and therefore for over a generation no political leadership got a mandate to make such a demand.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby saip » 18 May 2020 23:10

A doomsday forecast from Goldman Sachs

India to See Worst Recession, GDP to Shrink by 45%: Goldman Sachs

Link

Does it mean India's GDP will become 1.5 trillion or that in second quarter it will shrink by 11% to 2.65 trillion? On the other hand UN report says India and China may not be that affected though it is from 3/31/20.
https://www.thequint.com/news/india/cov ... -un-report

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 18 May 2020 23:14

"Annualized 45%" is just nonsensical misuse of the term 'annualized', but part for the course given where the article comes from (not a recommended source of news given their antecedents). They're projecting an approx 10% decline in quarterly GDP and working that out as an annualized figure. I don't think 10% is far off the mark for most countries, for the March-May period.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chola » 18 May 2020 23:26

saip wrote:A doomsday forecast from Goldman Sachs

India to See Worst Recession, GDP to Shrink by 45%: Goldman Sachs

Link

Does it mean India's GDP will become 1.5 trillion or that in second quarter it will shrink by 11% to 2.65 trillion? On the other hand UN report says India and China may not be that affected though it is from 3/31/20.
https://www.thequint.com/news/india/cov ... -un-report


$750B GDP per quarter. Will go down 45% in one quarter -- the 2nd, seriously with the lockdown, this will not be unexpected. Will lose $337B.

So by year's end, if the other quarters are normal then we will have a GDP of about $2.650T. If the 3rd and 4th quarters are marginally better but not normal then another 10% loss on top of that so maybe down to $2.500T. It cannot halve to $1.5T. There will be revolution if that happens.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby KJo » 18 May 2020 23:40

Amid all the masala headlines, it is hard to comprehend, at least for me.

Here is where we are. What will the next GDP growth number be next quarter? From 4.7%, will it go negative?

Image

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby TrishulM » 19 May 2020 13:47

Fully agree with Suraj ji there. It's the ability of the govt to execute the policies well rather than browbeating labour class into working in sub human conditions, that dictate how well your economy grows. Also complete eradication of poverty and education for all is, in my opinion, a necessary step towards a strong, equitable economy as it ensures we are able to fully leverage our massive population.

I was seeing a lot of ivory tower rationale being peddled here about forcing "sacrifices" on one generation. Suraj ji's point on Social Contracts is, well, on point. A nation at its fundamental is it's people. It must ensure everyone is on same page. It means not getting blindsided by these "sacrifices".

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chola » 19 May 2020 13:50

KJo wrote:Amid all the masala headlines, it is hard to comprehend, at least for me.

Here is where we are. What will the next GDP growth number be next quarter? From 4.7%, will it go negative?

Image


Yes. Every major economy will go negative this quarter. India is not an unicorn.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chola » 19 May 2020 14:14

TrishulM wrote:Fully agree with Suraj ji there. It's the ability of the govt to execute the policies well rather than browbeating labour class into working in sub human conditions, that dictate how well your economy grows. Also complete eradication of poverty and education for all is, in my opinion, a necessary step towards a strong, equitable economy as it ensures we are able to fully leverage our massive population.

I was seeing a lot of ivory tower rationale being peddled here about forcing "sacrifices" on one generation. Suraj ji's point on Social Contracts is, well, on point. A nation at its fundamental is it's people. It must ensure everyone is on same page. It means not getting blindsided by these "sacrifices".


Actually ivory tower rationale is always about stuff like complete eradication of hunger, of poverty, education for everyone stuff. Seriously, hain. What two-bit academic or philosopher anywhere had not spew such things? On Wall Street, we call these "happy unicorns sh1tting rainbows from their asses" ideals.

The real world is harsh. There are always tradeoffs. There no way to eradicate poverty unless you have money. There is no way to educate everyone unless you have money. In order to have money in the modern age, you need to build industry. In order to attract and build industry while you are still poor means making sacrifices to health, quality of life and even dignity.

Ever heard of Minamata? It is a symbol of Japan's industrialization. A massive mercury poisoning of a whole community that affected generations. And it was just the tip of an iceberg. The same thing has happened in Korea and is happening in China today.

Japan today is wealthy and healthy. Money allows it to fix the wounds that it inflicted on itself while growing. Agreed that the social contract is critical but needing to eradicate poverty first is pie-in-sky. What government had not tried to eradicate poverty? Even the worst regimes wanted a wealthy population if only to enhance their power.

The truth is you need build and nurture the industries that can bring you money to do good things in the future. Unfortunately, those industries will need to take land, water, labor, resources and investment from your population now but hopefully enrich them in the future.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Yagnasri » 19 May 2020 15:23

Indian economy is not the US economy. People in most of the cases spent their savings. Employees in many unorganised sectors workers took/forced to take a salary cut for months. There will be job losses in many sectors immediately due to slowdown and lack of demand. But we can not compare our situation with others. We have a lot of structural issues from almost every sector. That is what GoI is addressing along with the effect on the long closer of units by MSME and corporate sector. These steps are reforms which are needed anyway. Once done they will make recovery much easier. So lockdown withdrawals will be done along with reforms.

As far as to demand generation, I think the situation may not be as bad as the US. We have a lot of people with lot of money to spend and there will be some demand immediately after reopening in many areas. GoI should wait for that and in case needed take steps to stimulate demand. We have to note that unlike the US, Indian demand is not credit card-driven. A credit card and loan driven economy will be much much weaker than India wherein most of the time people buy with the cash payment most of that time.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby csaurabh » 19 May 2020 16:07

Hard work and sacrifice are not unknown to Indians. Only, they do it only to benefit themselves. They would not do it to benefit a 'nation'.
East asians are hard working, law abiding and patriotic. Indians are (generally speaking), lazy, rebellious and anti-national.
East asian model won't work for us. We need to stick with the Western democratic system no matter how flawed and inefficient it is.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mollick.R » 19 May 2020 16:09

chola wrote:
TrishulM wrote:Fully agree with Suraj ji there. It's the ability of the govt to execute the policies well rather than browbeating labour class into working in sub human conditions, that dictate how well your economy grows. Also complete eradication of poverty and education for all is, in my opinion, a necessary step towards a strong, equitable economy as it ensures we are able to fully leverage our massive population.

I was seeing a lot of ivory tower rationale being peddled here about forcing "sacrifices" on one generation. Suraj ji's point on Social Contracts is, well, on point. A nation at its fundamental is it's people. It must ensure everyone is on same page. It means not getting blindsided by these "sacrifices".


Actually ivory tower rationale is always about stuff like complete eradication of hunger, of poverty, education for everyone stuff. Seriously, hain. What two-bit academic or philosopher anywhere had not spew such things? On Wall Street, we call these "happy unicorns sh1tting rainbows from their asses" ideals.

The real world is harsh. There are always tradeoffs. There no way to eradicate poverty unless you have money. There is no way to educate everyone unless you have money.
In order to have money in the modern age, you need to build industry. In order to attract and build industry while you are still poor means making sacrifices to health, quality of life and even dignity.


+10

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mollick.R » 19 May 2020 16:12

Tractors a symbol of an upbeat agriculture sector
By Ketan Thakkar, Ashutosh R Shyam, ET Bureau|Last Updated: May 19, 2020, 08.44 AM IST

[url]MUMBAI: Demand for tractors is rising as fertiliser sales and foodgrain production hit record highs, reservoirs hold more water than 10-year average and a normal monsoon is forecast.

Demand for tractors has outstripped supply, as output has fallen with factories operating at a quarter of their capacity. Segment leader Mahindra & Mahindra has started planning for a second shift to meet demand, while rivals Escorts and Sonalika tractors have indicated that the market would return to normal levels within a quarter. Insiders expect the segment to continue growing and post the best performance in the automotive industry[/url]

https://economictimes.indiatimes.com/news/economy/agriculture/tractors-a-symbol-of-an-upbeat-agriculture-sector/articleshow/75816966.cms

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby nam » 19 May 2020 16:28

csaurabh wrote:Hard work and sacrifice are not unknown to Indians. Only, they do it only to benefit themselves. They would not do it to benefit a 'nation'.
East asians are hard working, law abiding and patriotic. Indians are (generally speaking), lazy, rebellious and anti-national.
East asian model won't work for us. We need to stick with the Western democratic system no matter how flawed and inefficient it is.


If that is the case, you would not a large industry in IT services or car manufacturing. For that matter a rowdy school system, where hardly anybody studies. No such thing exists.

People will work and work hard, if it is clear, what are they suppose to work and what the rewards are.

Some may seem lazy, because they will have somewhat easier access to money.

Our problem is finding what to work & enough of it for our people. As i repeatedly said on this thread, the biggest competitor to any growth industry in India is Government of India! The only major industry they are not in is.. IT services!

They have their finger in almost every industry. And to keep the employment of those in their company, GoI constraints private growth.

A efficient private industry will be able to employ more people with the same budget as PSU.

Why is GoI in steel production? or has so many Oil companies? or trucking making (BEML) or Airline?


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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 19 May 2020 20:04

csaurabh wrote:Hard work and sacrifice are not unknown to Indians. Only, they do it only to benefit themselves. They would not do it to benefit a 'nation'.
East asians are hard working, law abiding and patriotic. Indians are (generally speaking), lazy, rebellious and anti-national.
East asian model won't work for us. We need to stick with the Western democratic system no matter how flawed and inefficient it is.

This is a myth. It might apply to small homogenous entities like Korea but not something the size of China. Please don’t propagate this idea here.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby TrishulM » 20 May 2020 11:37

chola wrote:
Actually ivory tower rationale is always about stuff like complete eradication of hunger, of poverty, education for everyone stuff. Seriously, hain. What two-bit academic or philosopher anywhere had not spew such things? On Wall Street, we call these "happy unicorns sh1tting rainbows from their asses" ideals.
....

The truth is you need build and nurture the industries that can bring you money to do good things in the future. Unfortunately, those industries will need to take land, water, labor, resources and investment from your population now but hopefully enrich them in the future.


Promoting industries at the cost of natural justice will only fuel inequality, where rich gets even richer. Next you will say trickle down economics (an ivory tower rationale) works, right? If industries seek resources like labour, land or capital they need to make due compensation. No two ways about it. Its very easy to espouse sacrifices when you are not expected to make it. You are simply looking at homogeneous and tiny east Asian nations and pointing out how "sacrifices (euphemism for exploitation) have helped their economy while ignoring myriad of other factors.

The most biting issue isn't the lack of money but lack of effective administration, especially at local levels i.e. panchayats and municipals. There is enough money around to work on eradication of poverty and education for all. The more people are uplifted from poverty and the more people that are educated, the more they will contribute to the growth of economy. Good grass-root development, rather than top heavy development, is a more effective method.

I did not know you found the horrid scenario of Minamata so enviable. But why look so far? We have our very own Bhopal gas tragedy exhibiting the same basic issues- corporate negligence and lax enforcement of regulations. Exact opposite of what an effective administration should be which is, you know, a key ingredient to make a strong nation.

Edited for formatting.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chola » 20 May 2020 16:19

TrishulM wrote:
Promoting industries at the cost of natural justice will only fuel inequality, where rich gets even richer. Next you will say trickle down economics (an ivory tower rationale) works, right? If industries seek resources like labour, land or capital they need to make due compensation. No two ways about it. Its very easy to espouse sacrifices when you are not expected to make it. You are simply looking at homogeneous and tiny east Asian nations and pointing out how "sacrifices (euphemism for exploitation) have helped their economy while ignoring myriad of other factors.


Hain, please read my original post on this. It is not American-style "trickle down" but "Erhardian bargain" based on Ludwig Erhard's thesis in Germany where the state enters into a social contract with its citizens that enduring pain today will industrialize your country and make it better for your children tomorrow. And it was not tiny East Asian countries. It was the BIGGEST country in Western Europe (Germany) and the BIGGEST country in the world (China.) Japan is 100m strong which is bigger than any European country. South Korea is the size of France or the UK.

BTW, my parents are just like you. They were college-educated with the same (leftist) ideals that you have. They are great people as I am sure you are. But I have many many discussions with them and I know their idealism will always get in the way. If they ran a rural village, they will always keep it poor (they think happy) by sharing everything equitably.

They'll never make that hard decision to amass enough resources to create a factory for example. They'll balk at the land that'll be required and the people who will be moved off of it or the water and energy resources it'll take. And once up, the factory can't employ the whole village but only some of them. Obviously, the ones who lost their land will suffer more than the rest, the ones who get the initial jobs will benefit more. And if the factory pollutes and people's health suffer, fix it later but don't kill it on the vine. If people protest, do not give in and give up on the factory. An industry needs to be nurtured with resources and when you are poor you need to take them away from people. That is cold hard fact.

But if you cannot make those cold hard decusions then you will never advance. The Erhard way is to make that hard first decision knowing full well that people will suffer but that the benefits in the future will make it worthwhile.


The most biting issue isn't the lack of money but lack of effective administration, especially at local levels i.e. panchayats and municipals. There is enough money around to work on eradication of poverty and education for all. The more people are uplifted from poverty and the more people that are educated, the more they will contribute to the growth of economy. Good grass-root development, rather than top heavy development, is a more effective method.


No, that is a fallacy. There IS a lack of money. Having people in poverty means lack of money. No matter how efficient you are with two rupees, it is just two rupees.

When the nation is poor and you spend your time trying to lift everyone out of poverty you are only spreading the thin resources you have even thinner. You need to amass what you have together to make an investment for the future. For example, you can give 1000 villagers a dollar that they can spend on some extra naan or ghee for a meal or you can amass that $1000 and buy a communal tractor that can improve the harvest for the village next season. That extra naan or ghee might be critical for some poorer families but unfortunately you have to look past it for a better future for everyone.

Bhopal hanged heavy on my heart since I was a child. My parents raged against it. Yes, I didn't want to bring up that as an example.

The truth is we all want to be humanitarians. But the ivory tower humanitarians are not the ones creating money to alleviate poverty. All they do is cry for available monies to be spread. The ones creating money and resources are those very industrialists that the humanitarians rage against.


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