Indian Economy News & Discussion - Nov 27 2017

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

Postby vijayk » 18 Dec 2019 03:09

@muglikar_
Positive news for the day. 9,653 cases involving a total amount of approx. Rs.3,74,931.30 Cr have been disposed off at pre-admission stage of IBC Recovery rate increased from 26.5% in 2018 to 71.6% in 19 Time taken in recovery improved from 4.3 years in 2018 to 1.6 years in 19


https://www.financialexpress.com/indust ... h/1766631/
Banks win Rs 40,000 crore back in one stroke; SBI set to recover this much from Essar Steel IBC punch

The Supreme Court's landmark judgement in Essar Steel case spells a major win for banks as they stand to recover upward of Rs 40,000 crore of NPAs in a single stroke -- the money which otherwise was lost in all probability.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 18 Dec 2019 03:24

https://swarajyamag.com/economy/economi ... -for-india
Economic Slowdown: Is It Time For A 2008-Like TARP Plan For India?

It is clear now that mere rate cuts won’t do the job anymore as what is genuinely needed is to restore the credibility in our financial system.

There were reports of a Troubled Asset Relief Program (TARP) or its variant being considered by the finance ministry. TARP is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector.

In an earlier article on 18 October, I discussed the need for a bad-bank which would take these bad assets away from the balance sheets of banks and Non-Banking Financial Companies. The idea is of a TARP-like program and one can further outline the essence of the program.

Under such a program, Asset Reconstruction Companies (ARCs) could take over toxic assets from the balance sheets of companies and try to either restructure these assets or even proceed through the insolvency proceedings, if the need arises.

At present, India allows for a 100 per cent Foreign Direct Investment in ARCs through automatic route and, therefore, we should tap into foreign investors and ARCs looking for a higher rate of return.

The government can also consider creation of a Special Purpose Vehicle (SPV) with initial capital infusion and allow existing and foreign ARCs to invest through the SPV — however, under such a situation, the management of the SPV should remain private.

Initial infusion by the government would, perhaps, make the prospects attractive for foreign investors, who will make a lot of money in the process — especially once the real estate sector recovers.

Banks, of course, must take haircuts just as NBFCs will, but they have to pay some cost for the lack of prudent lending practices.

Under the proposed framework, no business gets a bailout as either the loan gets restructured or the company goes through the IBC process and, therefore, there’s no political fallout of such a move.


For those who’re yet to see the print, October IIP contracted by 3.8 per cent while the CPI for November was at 5.54. However, Consumer Food Price Inflation was up by 10.01 per cent thanks to onion prices.

Regular readers are aware of my hypothesis that we’ve perhaps bottomed out in Q2. Despite the relatively sluggish automobile sales in the month of November, I continue to believe that we have indeed bottomed out and, perhaps, the worst of all would’ve been the month of September.

Therefore, some uptick from October onwards is already visible and will be reflected in the Q3 figures.

Having said that, one must not expect a 7 per cent growth print for either Q3 or Q4 as the recovery seems to be slow — despite the extensive efforts made by the finance ministry to affect a revival of growth rates.

The reason for the slow revival is because of the unresolved stress in India’s financial systems, primarily banks and NBFCs. Credit flow has improved over the last couple of months, but the cost of capital continues to remain high.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby jaysimha » 18 Dec 2019 11:31

Karthik S wrote:
jaysimha wrote:
may have to wait for few more days.
MoD ( like all ministries ) will publish year end review - 2019 in pib website.


Thanks.

Welcome,,

Ministry of Corporate Affairs has the first one out
15-December-2019 11:21 IST
Year End Review -2019 of Ministry of Corporate Affairs
Several initiatives taken for providing Ease of Doing Business to law abiding corporates Creation of Institution of a robust Insolvency & Bankruptcy framework


https://pib.gov.in/newsite/PrintRelease ... lid=195889

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby sum » 19 Dec 2019 05:55

Sobering read:
Demographic dream is collapsing rapidly

The demographic dividend of a country is essentially a period of two-three decades when the birth rates go down and this leads to a situation wherein the workforce of the country is growing at a faster rate in comparison to its population. As these individuals enter the workforce, find work, earn money and spend it, the economy is expected to do well and grow at a faster pace than it has in the past.
In the Indian case, the IDD slides told us that nearly 12 million Indians a year, or one million a month, are expected to enter the workforce. This would happen over three decades (largely up to the mid-2030s). As these individuals entered the workforce, the Indian economy would grow at a very fast pace... as fast as China’s, if not faster.
China had grown at 12.72% in 2006 and would end up growing by 14.2% in 2007. Hence, the possibilities in India were endless. The rapid economic growth would pull millions of Indians out of poverty. This was the theory that was sold to us. Things went largely as per plan up until 2011. Since then, things have started to go south and now, in 2019, we have enough evidence to say with reasonable confidence that India’s so-called demographic dividend has started to unravel and is the main reason behind the current economic slowdown. Here’s a breakdown of how India’s dream began to collapse:


The growth in private consumption expenditure peaked in 2011-12 at 17.53% (see Chart 1). It has largely been on a downward trend since then. In the first six months of 2019-20, for the first time since 2004-05, the growth has fallen to single digits and stands at 7.02% (all growth numbers in nominal terms).


In 2010-11, new investment projects worth ₹ 25.73 trillion were announced. In 2018-19, this was down to ₹12.1 trillion or 46% of the 2010-11 figure. During the first six months of 2019-20, new investment projects worth just ₹2.12 trillion have been announced.
When it comes to investment projects which have been dropped, the situation appears even more grim. In 2010-2011, investment projects worth ₹4.04 trillion had been dropped. In 2018-19, projects worth ₹20.74 trillion were dropped. During the first six months of 2019-20, projects worth ₹7.89 trillion have already been dropped.


The Centre for Monitoring Indian Economy provides us with more recent unemployment data. In January 2017, the rate of unemployment among 15-19 year olds, 20-24 year olds and 25-29 year olds, was 27.34%, 21.65% and 8.73%, respectively. In November 2019, the rate was at 40.92%, 39.23% and 10.03%, respectively.
What also needs to be emphasized is that between January 2017 and November 2019, the labour force participation rate has gone down from 45.26% to 42.37%. The labour force participation rate is the proportion of working-age population that is employed or actively seeking employment. With the rate falling, what it tells us is that many people have even stopped looking for jobs. Even after this, the rate of unemployment has increased.
Hence, job creation is not happening and without job creation what will the million individuals entering India’s workforce every month (our so-called demographic dividend) do?


It is safe to say now that India’s demographic dividend is collapsing. Some state governments are dealing with this by reserving jobs for locals and, in the process, hoping to narrow down the pool of people who are eligible for jobs within the state. Andhra Pradesh is one such state. Maharashtra’s newly formed three-party government has such plans as well. This is basically a race to the bottom which puts the entire idea of India at stake.
Union finance minister Nirmala Sitharaman recently said that the economy was not in a recession. And she is right, given that recession is a situation where the GDP (the size of the economy) contracts for two consecutive quarters. Having said that though, the promised acche din is not going to come soon either.
So, what is the need of the hour? As economic history clearly suggests, no nation has gone from a developing one to a developed country without making gains on the exports front.
In India’s case, exports of goods and services peaked at 25.43% of GDP in 2013-14. In 2018-19, exports had fallen to 19.74% of GDP. The country’s export capability has crashed big time.
For Indian manufacturers to be able to compete internationally, reforms are required on the land, labour, and tax fronts. The government has recently reduced corporate income-tax rates. Over and above this, even to compete within the country, the Indian entrepreneur needs to pay a fair price for electricity and freight. Currently, the cost of cheap electricity for farmers is being borne by industry. Along similar lines, railway passengers are subsidized at the cost of freight. The taxes on aviation fuel have ensured that air cargo rates in India are among the highest in the world. The turnaround time in many government-run ports is also too long.


We have time till 2035 to cash in on our demographic dividend. We are more or less in 2020 now, and 2035 is just a little over a decade-and-a-half away. After that horizon year, India will start aging and the benefits of the dividend will start to fade.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby sudarshan » 19 Dec 2019 08:01



Most people continue to regard India's population as a liability. Sorry, but that era is past. The new reality is that the southern states are already below replacement level as far as fertility goes, which means their population is going to collapse (this collapse has already been built-in). Reversing the collapse means maintaining a fertility rate of >2 per woman (2.1 is the internationally accepted rate). Northern states are above replacement level, but fertility is rapidly declining, and a collapse seems imminent even there. Demographic collapse is disaster for the economy.

Israel seems to be one country which didn't let its education level play havoc with its fertility rate. An Israeli guy told me that it is the Israeli culture (not Jewish, but Israeli) to "produce" at a healthy rate. I think India needs to seriously think of educating people against the dangers of having too few children. We are well aware of the dangers of having too many, there's a happy mean, and that mean is not at the point of having 1 child per couple.

The country can handle a billion people. Spreading out over the world is also the way to go. Europeans spread out to far-flung continents, that's how they gained world-wide influence. No need to regard the Indian landmass as the limit for Indians. A healthy expat population is an asset.

South India is heading below 1.8 children per woman. India as a whole is slightly above replacement. I'd say it's time to start rethinking the population policy, with a view to maintaining (not expanding) the population and avoiding demographic collapse.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Kaivalya » 19 Dec 2019 09:08

Gaurav Dalmia at Knowledge @ Wharton on the topic of "Can Indian economy return to high growth?"

https://knowledge.wharton.upenn.edu/article/india-leadership-gourav-dalmia/


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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 19 Dec 2019 21:04

^^ Please believe neither. It's a telling state of affairs when neither the former CEA nor the current one has any grip on India's economic reality.

There is no stock market conundrum. Markets are simply pricing in the recovery. Data will catch up later.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby VKumar » 19 Dec 2019 22:29

Personally I believe that stock market is being driven by liquidity. Corruption hasn't reduced significantly. The black money has to be parked somewhere. Real estate and Jewellery attract tax inspectors attention. Cars are BSIV till February or March. Best way is SIP. So stock markets are SIPPING their way upwards. Hopefully, the budget will bring some personal tax benefits to sustain the markets and imrove consumption leading to growth.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby tandav » 19 Dec 2019 22:42

A pertinent data from my circle. Take it FWIW
I and most people in my circle (mostly MSME small fry who are feeding off the sub contract ecosystems of big whales like L&T, Shapoorji Palonji, servicing (Real Estate and Infra sector) will tax invoice 30%-50% less this year than last FY and most of us will probably not be paid as we have not been able to raise tax invoices given that we have to pay GST regardless whether client pays us or not. A good 50% of work delivered is lying around as proforma invoices whose payment have not been approved by our clients and will not be approved at all in the foreseeable future as the bigger whales are claiming that due to market slowdown they don't have any money.

I own personal bet on the Indian economy booming due to business friendly reforms by Modi and Co via Infrastructure spend is looking stupid... now I am saddled with a unsustainable amount of high interest unsecured debt which I had taken to develop markets... so far I have managed to service it last 2 years via whatever little receipts by clients have coughed up and personal savings and bailout from my US relatives. However soon I may have to liquidate some long held family assets to repay the loans.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby rhytha » 19 Dec 2019 23:07

tandav wrote:A pertinent data from my circle. Take it FWIW
I and most people in my circle (mostly MSME small fry who are feeding off the sub contract ecosystems of big whales like L&T, Shapoorji Palonji, servicing (Real Estate and Infra sector) will tax invoice 30%-50% less this year than last FY and most of us will probably not be paid as we have not been able to raise tax invoices given that we have to pay GST regardless whether client pays us or not. A good 50% of work delivered is lying around as proforma invoices whose payment have not been approved by our clients and will not be approved at all in the foreseeable future as the bigger whales are claiming that due to market slowdown they don't have any money.

I own personal bet on the Indian economy booming due to business friendly reforms by Modi and Co via Infrastructure spend is looking stupid... now I am saddled with a unsustainable amount of high interest unsecured debt which I had taken to develop markets... so far I have managed to service it last 2 years via whatever little receipts by clients have coughed up and personal savings and bailout from my US relatives. However soon I may have to liquidate some long held family assets to repay the loans.



If they are registered MSME, they can send invoice (if work completion certificate or document has been received from client) and corporates need to be paid within 45 days as per the msme act. If not they need to declare it.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Aditya_V » 20 Dec 2019 11:24

The problem with that is you burn bridges with the corporate

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chetak » 20 Dec 2019 20:48

twitter


Former CEA ⁦@arvindsubraman⁩ is foxed by a sizzling stock market amid economic gloom — says he’ll “fly all the way down from the US to understand this puzzle.”

No need. Answer’s simple. Stock markets are forward looking, economists are backward looking.




Image

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

Postby kit » 20 Dec 2019 20:50

chetak wrote:twitter


Former CEA ⁦@arvindsubraman⁩ is foxed by a sizzling stock market amid economic gloom — says he’ll “fly all the way down from the US to understand this puzzle.”

No need. Answer’s simple. Stock markets are forward looking, economists are backward looking.







all the "black" money running into stocks ?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 20 Dec 2019 21:04

It is probably an effect of corporate tax reduction where bottomlines of companies are going to improve. There are short term players in markets and long term players. Long term players do not look at the troughs that every economic cycle goes through but the future potential which everyone agrees India has. As for black money entering stock markets I believe that presently there is an audit trail for investors.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chetak » 20 Dec 2019 21:13

Supratik wrote:It is probably an effect of corporate tax reduction where bottomlines of companies are going to improve. There are short term players in markets and long term players. Long term players do not look at the troughs that every economic cycle goes through but the future potential which everyone agrees India has. As for black money entering stock markets I believe that presently there is an audit trail for investors.


it's just 30 odd scrips that are considered.

Effectively it tells you jack.

It only means that the sentiments are very buoyant at this time.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby tandav » 20 Dec 2019 22:10

rhytha wrote:
tandav wrote:A pertinent data from my circle. Take it FWIW
I and most people in my circle (mostly MSME small fry who are feeding off the sub contract ecosystems of big whales like L&T, Shapoorji Palonji, servicing (Real Estate and Infra sector) will tax invoice 30%-50% less this year than last FY and most of us will probably not be paid as we have not been able to raise tax invoices given that we have to pay GST regardless whether client pays us or not. A good 50% of work delivered is lying around as proforma invoices whose payment have not been approved by our clients and will not be approved at all in the foreseeable future as the bigger whales are claiming that due to market slowdown they don't have any money.

I own personal bet on the Indian economy booming due to business friendly reforms by Modi and Co via Infrastructure spend is looking stupid... now I am saddled with a unsustainable amount of high interest unsecured debt which I had taken to develop markets... so far I have managed to service it last 2 years via whatever little receipts by clients have coughed up and personal savings and bailout from my US relatives. However soon I may have to liquidate some long held family assets to repay the loans.



If they are registered MSME, they can send invoice (if work completion certificate or document has been received from client) and corporates need to be paid within 45 days as per the msme act. If not they need to declare it.


most employers will not give any work completion certificate either.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 22 Dec 2019 05:21

chetak wrote:it's just 30 odd scrips that are considered.

Effectively it tells you jack.

It only means that the sentiments are very buoyant at this time.

And what is ‘sentiment’ ? The sustained volume of cash flowing into the market isn’t ‘sentiment’. Most of the money these days is not controlled by people but algorithmic trading platforms on computer systems with no feelings.

BSE Sensex is a 30 stock index but other indices are not . There are NSE indices all the way up to NSE500 that show a similar trend in index valuation. Almost everything in terms of broad indices are near 52w highs , except VIX (the volatility index) which is near its 52w low.

To claim ‘it’s still only 500, not everything’ means little because unlike the Dow or Nikki, these are not price but capitalization weighted indices - they are the 500 largest free float weighted stocks and thus reflect the overwhelming majority of the market valuation in terms of capitalization.

Continuing...

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 22 Dec 2019 05:58

In my view there’s a problem with statistical data, and it’s not a trivial one - either in terms of what the problem is, or it’s consequences. Bad data has led to spectacular economic failures, such as how the US worked it’s way into the Great Depression . As former Fed chief Ben Bernanke, a lifelong student of that era said , it’s not the stock market crash that caused the depression , but the deflation and drop in credit afterwards . Credit lubricates business. The US learned from that and setup the FDIC to guarantee deposits, and the BLS to exhaustively collect accurate data quickly .

Coming back to us, the problem can be separated into groups which I’ve ranked in subjective order of reliability:
1. numerical data on financial transactions
These include forex reserves, export and import data (services and merchandise), FDI and other figures that can be quickly collected and summarized on a daily/weekly/monthly rate at a single point , eg the RBI who maintain all forex clearinghouse information.

These are the most reliable data. None of these are indicative of a slowdown however - just he opposite, with strong forex reserves and services exports, and merchandise trade reflective of prevailing world trade situation . FDI is a little more tricky as there’s scope for inaccuracy in reinvested earnings data, but fresh inflows are tracked directly.

2. indices on financial transactions
These are the market indices for equities and debt. They’re about as valid as item 1. But I’ve listed them separately because they’re second order figures constituted from primary data, as opposed to actual primary data . These are again available rapidly down to seconds or minutes on the exchanges.

These also reflect continued growth in capital markets all the way up to the broad Nifty500 cap weighted indices.

3. Indices on sentiment

The PMI figures fit in this category . They are a combination of subjective opinion and directional movement on a month to month basis . They offer a ‘wisdom of the crowd’ view combined with somewhat noisy month to month directional change , eg increase or decrease in inventory since prior month .

4. Indices on economic data

This is the category with least confidence and what gets most press . It could arguably broken down into financial and non financial data. The former includes IIP, core sector, CPI etc while the latter includes labour force and unemployment data . Both figures are suspect because we have no reliable reporting of these . NSSO data is a joke because of the several years lag and politics . Farm and non farm data has to be monthly at the very least.

As for indices that are weighted baskets representing a larger market, eg IIP and GDP, they have forever been mired in controversy. Maybe 5% of all posts in all econ threads here have been around GDP whining .

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Kaivalya » 22 Dec 2019 08:39

Surajji,

A couple of years back GST was seen to be helping with more data so we dont have to rely on category 4 that you list. I haven't seen an update ? Any measure of spending has tripled and I cannot imagine that it is not contributing to GDP. What are suitable methods to replace it? I dont see enough highlights of its poor quality.

https://m.economictimes.com/markets/expert-view/gst-to-play-a-big-role-in-gdp-measurement-tca-anant/articleshow/58961661.cms

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 22 Dec 2019 09:13

GDP data is not collected by FinMin but by MOSPI . Just the fact that GDP data is revised 3x and often sees significant changes in that time makes it a suspect , and this has been the case for years .

Theoretically GST helps a lot but reality is always about the execution and not the theory . GDP data collection issues have stopped being about theory for quite some time. On paper the techniques for accounting have kept up with world standards. But implementation wise it’s not yet an efficient or clear exercise. The fact that GDP revisions often become political games is a sign of weak institutional basis of the effort.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 22 Dec 2019 09:47

Suraj wrote:
Coming back to us, the problem can be separated into groups which I’ve ranked in subjective order of reliability:
1. numerical data on financial transactions
These include forex reserves, export and import data (services and merchandise), FDI and other figures that can be quickly collected and summarized on a daily/weekly/monthly rate at a single point , eg the RBI who maintain all forex clearinghouse information.

These are the most reliable data. None of these are indicative of a slowdown however - just he opposite, with strong forex reserves and services exports, and merchandise trade reflective of prevailing world trade situation . FDI is a little more tricky as there’s scope for inaccuracy in reinvested earnings data, but fresh inflows are tracked directly.



Just to clarify some basics, strong FX reserves growth, high FDI, exports are not contradictory with slow domestic growth.

1) FX reserves go up when there is a Balance of Payments a/c (BoP)are +ve and the RBI sterilizes the inflows to prevent INR appreciating too much (RBI buys USD, sells rupees). BoP is made up of:
1) Capital account - investors money inflows/outflows

There is huge inflows into EM driven by ample USD liquidity provided by a dovish Fed. India is one of the main EMs. This also explains to a large extent the stock market melt up. Also India's long run bullish case remains intact. So funds continue to pour in, save for episodes like after the inexplicable tax proposal in this year's budget.

2) Current account - exports - imports + remittances, dividend and coupon payments on cross-border assets.

exports continue to grow as India's main market (US) continues to do well. OTOH India barely exports to troubled econs like China, SK, Germay.
Imports growth fell due to domestic consumption slowdown. This is a classic sign of end-stage EM slowdown episode.

What this means is that while the external sector continues to do well, the domestic econ did poorly this year. Which is why some policymakers excuse that we are suffering due to external slowdown makes no sense - it is quite the opposite.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 22 Dec 2019 09:51

tandav wrote:A pertinent data from my circle. Take it FWIW
I and most people in my circle (mostly MSME small fry who are feeding off the sub contract ecosystems of big whales like L&T, Shapoorji Palonji, servicing (Real Estate and Infra sector) will tax invoice 30%-50% less this year than last FY and most of us will probably not be paid as we have not been able to raise tax invoices given that we have to pay GST regardless whether client pays us or not. A good 50% of work delivered is lying around as proforma invoices whose payment have not been approved by our clients and will not be approved at all in the foreseeable future as the bigger whales are claiming that due to market slowdown they don't have any money.

I own personal bet on the Indian economy booming due to business friendly reforms by Modi and Co via Infrastructure spend is looking stupid... now I am saddled with a unsustainable amount of high interest unsecured debt which I had taken to develop markets... so far I have managed to service it last 2 years via whatever little receipts by clients have coughed up and personal savings and bailout from my US relatives. However soon I may have to liquidate some long held family assets to repay the loans.


Thanks for sharing.

Economists love to talk about the cost of high inflation but never the pain brought on by excessively tight policy. The truth is that workers tend be hurt much more by losing their jobs (or staying unemployed) than by high onion prices (which is not going to be helped by tight policy anyway),

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karan M » 22 Dec 2019 11:13

Rahul - simple question for you. If we leverage ourselves more (not ideal, if I read you correctly) or do some kind of quantitative easing program (print more sovereign debt, basically?), do you think we can manage an economic revival?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 22 Dec 2019 11:50

Yes, that will help but typically productive govt expenditure will be in infrastructure which has a long gestation period for returns but will create demand for certain industries e.g. cement and steel. If you want to do a quicker turnaround best thing to do is to give substantial tax breaks to the middle class (the lower middle class are currently mostly exempt) to increase consumption. You can balance it by reducing non-essential expenditure by increasing govt efficiency and have a moratorium on expansion of welfare policies for at least 2 years. Asset liquidation i.e. disinvestment is a temporary measure but going forward with lesser and lesser PSUs there is nothing more to sell. The most effective way to counter this is to stimulate jobs sustainably which gives real money in the hands of the population. This will require the govt to push hard for getting foreign companies to relocate to India and domestic companies to expand by making it easier to do business in India. External markets for Indian products should be expanded by renegotiating FTAs and negotiating with China to open their markets reciprocally just like US is doing. So in short the govt can do a lot of things but they need to move fast.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 22 Dec 2019 14:57

Rahulsidhu wrote:Just to clarify some basics, strong FX reserves growth, high FDI, exports are not contradictory with slow domestic growth.

1) FX reserves go up when there is a Balance of Payments a/c (BoP)are +ve and the RBI sterilizes the inflows to prevent INR appreciating too much (RBI buys USD, sells rupees). BoP is made up of:
1) Capital account - investors money inflows/outflows

There is huge inflows into EM driven by ample USD liquidity provided by a dovish Fed. India is one of the main EMs. This also explains to a large extent the stock market melt up. Also India's long run bullish case remains intact. So funds continue to pour in, save for episodes like after the inexplicable tax proposal in this year's budget.

2) Current account - exports - imports + remittances, dividend and coupon payments on cross-border assets.

exports continue to grow as India's main market (US) continues to do well. OTOH India barely exports to troubled econs like China, SK, Germay.
Imports growth fell due to domestic consumption slowdown. This is a classic sign of end-stage EM slowdown episode.

What this means is that while the external sector continues to do well, the domestic econ did poorly this year. Which is why some policymakers excuse that we are suffering due to external slowdown makes no sense - it is quite the opposite.

I don’t have much disagreement there . I was really just defining a taxonomy of levels of reliability of data . Yes the forex reserves are an indicator of RBI sterilizing inflows to avoid appreciation of the rupee and associated loss in export competitiveness .

I haven’t tracked EMs in general this year but I’m not sure the Indian markets are simply a case of the rising tide lifting all boats . Is it ?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby csaurabh » 23 Dec 2019 01:00

Kaivalya wrote:
csaurabh wrote:India's online B2B market currently is just rubbish. The two best sites ( indiamart and industrybuying ) are so bad that sometimes it is easier to ship things directly from China by buying through Aliexpress.


Agreed sir- hence the anamoly of zetwerk is noteworthy along with some more like them getting vc money. It is a consolation that we are improving. Here is forbes calling out 3 steps within manufacturing - to solve for bridging the gap between few large players and 1000s of small players.This eco system has to mature by becoming a deeper market with all kinds of sizes and shapes

https://www.forbes.com/sites/michaelmandel1/2019/09/05/digital-manufacturing-3dprinting-make-in-india-modi-asia-industry/

Till then we have to be patient...


Zetwork is a manufacturing services platform. Not a B2B marketplace.
I have tried out another such website ( https://www.akaar.org/ ). They quoted me a really high price ( about Rs. 2400 ), for some laser cutting, which I later did locally for about Rs. 800. So I remain quite skeptical.

I have a lot more thoughts on the B2B situation in India. Will post later.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 23 Dec 2019 06:52

Karan M wrote:Rahul - simple question for you. If we leverage ourselves more (not ideal, if I read you correctly) or do some kind of quantitative easing program (print more sovereign debt, basically?), do you think we can manage an economic revival?

IMHO this is a question of effectiveness of execution and not of theory . Theoretically sure it would work and it’s the general idea being suggested .

The problem is execution. This requires the administration, the banking system and the infra companies to work together effectively. The administration has a particular burden to ensure that everything is handled smoothly - environmental clearances , access to capital , power, raw material ...

And the most important thing is that when you enhance supply of infrastructure you have to have in place the reforms that enable them to be used effectively from the outset. Building a lot of new roads and not enabling private or commercial transportation is to quickly guarantee that the associated debt burden becomes unsustainable because debt servicing is hampered out of the door .

In this regard I support what’s suggested in the railway thread - if we are going to invest a lot of money in new infrastructure, build out a 20-30k km high speed rail network. The rail network is nowhere close to demand constrained . It’s supply that’s the problem - far more people would use it if it’s faster and easier to access . It’s ‘cheap’ in terms of policy framework because there’s no auto policy, fuel cost issues, parking, toll framework and other details to consider .

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby sajo » 23 Dec 2019 12:38

https://www.deccanherald.com/national/n ... 87382.html

After RFID (radio-frequency identification)-based FASTag was implemented to collect toll, the toll revenue increased to Rs 81 crore/day from Rs 68 crore/day, Union Road Transport Minister Nitin Gadkari said on Friday
.

Imagine the leaks that could be plugged after the full collection moves to traceable Fastag. Personally, I am yet to make the move, partly because my bank is sitting on my application and their customer care is useless.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JayS » 23 Dec 2019 12:42

Suraj wrote:
In this regard I support what’s suggested in the railway thread - if we are going to invest a lot of money in new infrastructure, build out a 20-30k km high speed rail network. The rail network is nowhere close to demand constrained . It’s supply that’s the problem - far more people would use it if it’s faster and easier to access . It’s ‘cheap’ in terms of policy framework because there’s no auto policy, fuel cost issues, parking, toll framework and other details to consider .

+1.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JayS » 23 Dec 2019 12:44

sajo wrote:https://www.deccanherald.com/national/national-politics/toll-collection-increased-after-fastag-mandatory-787382.html

After RFID (radio-frequency identification)-based FASTag was implemented to collect toll, the toll revenue increased to Rs 81 crore/day from Rs 68 crore/day, Union Road Transport Minister Nitin Gadkari said on Friday
.

Imagine the leaks that could be plugged after the full collection moves to traceable Fastag. Personally, I am yet to make the move, partly because my bank is sitting on my application and their customer care is useless.

There would be two streams of data on road tax now, one from the Fastag accounts and another from the toll booths. Cross verification would be easier and cooking the books would be more difficult.
I'd imagine this will help cut the corruption in the Road sector. Companies/contractors significantly underquote the total collection. Also with a better grip on the real life data, liquidating future toll revenue would bring more mone today for infra developmement.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby nandakumar » 23 Dec 2019 15:38

tandav wrote:A pertinent data from my circle. Take it FWIW
I and most people in my circle (mostly MSME small fry who are feeding off the sub contract ecosystems of big whales like L&T, Shapoorji Palonji, servicing (Real Estate and Infra sector) will tax invoice 30%-50% less this year than last FY and most of us will probably not be paid as we have not been able to raise tax invoices given that we have to pay GST regardless whether client pays us or not. A good 50% of work delivered is lying around as proforma invoices whose payment have not been approved by our clients and will not be approved at all in the foreseeable future as the bigger whales are claiming that due to market slowdown they don't have any money.

I own personal bet on the Indian economy booming due to business friendly reforms by Modi and Co via Infrastructure spend is looking stupid... now I am saddled with a unsustainable amount of high interest unsecured debt which I had taken to develop markets... so far I have managed to service it last 2 years via whatever little receipts by clients have coughed up and personal savings and bailout from my US relatives. However soon I may have to liquidate some long held family assets to repay the loans.

On the point about GST having to be paid regardless of whether the customer makes makes payments or not is not something new to the GST regime. Even earlier, excise duty payable to the Centre and sales tax due to State Government have to be paid whether or not customers make payments on due date or not. What the GST regime has done is to bring down the turnover threshold for Central government tax dues from Rs 1.5 crore (the minimum turnover limit for excise duty burden to Rs 20 lakhs) in line with the State level tax threshold. The working capital requirements have gone up by Rs roughly Rs 35 lakhs assuming a 90 day credit availed by customers on the incremental annual turnover of Rs 1.3 crore which were earlier exempt from excise duty levy. What the Government can do to mitigate the burden is to permit a 90 day GST loan from the Government on payment of 9% interest on both CGST and State GST. Alternatively Mudra Bank can offer refinancing facility for commercial banks for the GST component of bank credit that it extends to MSMEs so that even government resources are not put to a strain. Currently the Government extracts an interest at 18% for delayed payments by vendors of GST dues. This is punitive as even State Governments borrow at 8% and the Centre at 6.5%.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Supratik » 23 Dec 2019 20:57

I believe NS has already recently announced something on similar lines as above.

Meanwhile, a positive assessment of the Modi reforms.

https://indianexpress.com/article/opini ... n-6179994/

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 23 Dec 2019 21:36

Suraj wrote:[

I haven’t tracked EMs in general this year but I’m not sure the Indian markets are simply a case of the rising tide lifting all boats . Is it ?


Stock markets are never simple to reason about, but yes, ample USD liquidity does lift all boats (asset classes). Charting NSE50 vs $EEM should confirm it.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 23 Dec 2019 21:51

Karan M wrote:Rahul - simple question for you. If we leverage ourselves more (not ideal, if I read you correctly) or do some kind of quantitative easing program (print more sovereign debt, basically?), do you think we can manage an economic revival?


To the question about leverage, yes, a re-leveraging is what is needed. This is what the policymakers are trying to encourage - higher credit growth, but the private sector is mostly not biting. Even Reliance is talking about zero net debt.

The problem is that credit/leverage is taken in expectations of higher incomes. When the projected income growth does not pan out, we end up with a debt crisis. We have already seen two such crises in this decade 2013 and 2018. Naturally, after such a bust the private sector clams up for a couple of years.

So yes, while pvt sector should re-leverage and invest, the key question is how to ensure that GDP growth keeps up so that the debt remains serviceable. Here I am not talking about govt. underwriting business risk - there will always be winners and losers-- but the *average* business should be home safe.

While there are a lot of economic reforms that need to be done, what I am arguing for is just good macro management. When the pvt sector is retrenching, govt should cut taxes/spend more, and vice versa. Right now the picture is mixed - while there was a corp tax cut (good), the central govt. is apparently asking NHAI to cut spending and delaying payments to states (bad).

As for QE, let's be careful on the definition- QE is when the RBI buys govt bonds in the market in exchange for newly "minted" rupees. This does not increase sov. debt but swaps one asset (bonds) for another (cash). The end result is lower interest rates. With that said, yes, the RBI should do QE to bring interest rates down (they have already started btw).

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby csaurabh » 23 Dec 2019 22:19

Wtf happened here? Global tender? What about make in India

https://swarajyamag.com/insta/global-te ... ts-rolling

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby tandav » 24 Dec 2019 00:20

nandakumar wrote:
tandav wrote:A pertinent data from my circle. Take it FWIW
I and most people in my circle (mostly MSME small fry who are feeding off the sub contract ecosystems of big whales like L&T, Shapoorji Palonji, servicing (Real Estate and Infra sector) will tax invoice 30%-50% less this year than last FY and most of us will probably not be paid as we have not been able to raise tax invoices given that we have to pay GST regardless whether client pays us or not. A good 50% of work delivered is lying around as proforma invoices whose payment have not been approved by our clients and will not be approved at all in the foreseeable future as the bigger whales are claiming that due to market slowdown they don't have any money.

I own personal bet on the Indian economy booming due to business friendly reforms by Modi and Co via Infrastructure spend is looking stupid... now I am saddled with a unsustainable amount of high interest unsecured debt which I had taken to develop markets... so far I have managed to service it last 2 years via whatever little receipts by clients have coughed up and personal savings and bailout from my US relatives. However soon I may have to liquidate some long held family assets to repay the loans.

On the point about GST having to be paid regardless of whether the customer makes makes payments or not is not something new to the GST regime. Even earlier, excise duty payable to the Centre and sales tax due to State Government have to be paid whether or not customers make payments on due date or not. What the GST regime has done is to bring down the turnover threshold for Central government tax dues from Rs 1.5 crore (the minimum turnover limit for excise duty burden to Rs 20 lakhs) in line with the State level tax threshold. The working capital requirements have gone up by Rs roughly Rs 35 lakhs assuming a 90 day credit availed by customers on the incremental annual turnover of Rs 1.3 crore which were earlier exempt from excise duty levy. What the Government can do to mitigate the burden is to permit a 90 day GST loan from the Government on payment of 9% interest on both CGST and State GST. Alternatively Mudra Bank can offer refinancing facility for commercial banks for the GST component of bank credit that it extends to MSMEs so that even government resources are not put to a strain. Currently the Government extracts an interest at 18% for delayed payments by vendors of GST dues. This is punitive as even State Governments borrow at 8% and the Centre at 6.5%.


I will be happy to pay even 10-15% simple interest on unpaid GST as long as I can raise tax invoice on my clients and then invoke the MSME clause to get apid which should happen automatically. However not paying GST is causing the GST officers to call us and threaten us with Bank Lockouts which makes it impossible to run business... Clients not paying, Banks wanting their loan money back, Taxman locking accounts all of it leads to threat of business defaults. There is little or no protection to the person who actually works.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby isubodh » 24 Dec 2019 00:30

nandakumar wrote:... The working capital requirements have gone up by Rs roughly Rs 35 lakhs assuming a 90 day credit availed by customers on the incremental annual turnover of Rs 1.3 crore which were earlier exempt from excise duty levy. ...


Is there no factoring facility available ? for a cost of 2-3% Invoices should be discounted by some bank/NBFC.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby VKumar » 24 Dec 2019 00:37

Nowadays customers not paying GST amount till they see the invoice on their computer.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby kit » 24 Dec 2019 00:39

csaurabh wrote:Wtf happened here? Global tender? What about make in India

https://swarajyamag.com/insta/global-te ... ts-rolling


buy in india , maybe a few ppl from railway board can go for some foreign jaunts


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