Indian Economy - News & Discussion 27 May 2012

vishvak
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Re: Indian Economy - News & Discussion 27 May 2012

Postby vishvak » 25 Sep 2013 00:24

So its all ad-hoc in oil pricing. There is no WTO looking on there and passing structures against oil Mafia.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Prem » 25 Sep 2013 04:28

Virupaksha wrote:
Jhujar wrote:A
There are things like: whether you have paid spot prices or some other term commitment. Like for example our 20% source was iran. Last few months we have been facing problems with them due to sanctions. If we had to replace them in a pinch from saudi, which is the sweetest oil out there. India might have paid the soudi oil market price, which is different but trends along with the texas oil market price.


Thanks, but still big gap exist . Oil have remained below 100, mostly in 80$range. India could not have bought close to Billion Barrels with average 114 DPB.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby disha » 25 Sep 2013 10:26

Capital Short
Capital Poor
Capital Scarce.

Folks since some form or other of the above words have entered the BRF Lingo w.r.t Indian economy., are we going to peg all our problems on those words?

For eg. we cannot have a EV based transport fleet because we are - Capital Scarce economy
Or
We cannot have a regional transport aircraft of our own since we are - Capital poor economy
Or
We cannot develop our port infrastructure - Capital short economy only!

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Pratyush » 25 Sep 2013 10:59

India needs a new economic vision

A man can fail many times’, John Burroughs, the American naturalist once wrote, ‘but he isn’t a failure until he begins to blame somebody else’. Burroughs’ views aptly describe the prime minister’s efforts to pin the economic mess on the ‘collective responsibility of the House’. History is full of such instances that when faced with imminent failure, the proponent flays around looking for people to blame.

It is obvious that the leadership has been for some years flaying around helplessly in addressing the fundamental issues of the economy. The problem stems from a flawed and lazy economic vision — with its focus on dependence on foreign portfolio flows and stock market movements as ‘reforms’. Instead of focus on real investments, manufacturing and job-creation, the reliance on fickle portfolio capital flows, populist spending and dysfunctional governance with crony capitalism and corruption have brought India to this pass.

What is disturbing is that there is hardly any real policy innovation despite the so-called ‘dream team’ being at the helm for a decade. The policy domain is incoherent with competitive profligacy and competing ‘flagship programmes’.

The over dependence on portfolio flows, which has turned the economy into a giant betting parlour combined with an absence of structural reforms, has felled the rupee and economic growth. Two decades after 1991, the economy is yet to be really competitive due to cosy-cronyism helped by non-functioning regulation and regulators.

The political leadership has tried to camouflage failure with politically correct sound-bytes — about expansion of welfare schemes despite evidence of leakage and knowledge that only a small percentage of the target groups will actually benefit. The pathetic state of human indicators in the face of all the government spending reflects the stark failure of policy and institutionalisation of corruption. India is afflicted by an epidemic of legislate-and-spend.

While a nation like ours with vast inequities does require a social security net, to do so in the manner we are doing today, is a recipe for disaster. We are moving our nation from a vision of enterprise and competition to one where entitlements will rule.

There is a need to redefine the role of government and restore the credibility of government institutions. We also need a new architecture, a coherent economic vision, prudent financial management and a team of credible leaders. The first step would be to reaffirm commitment to fiscal accountability by reinstating the intent of the Fiscal Responsibility and Budget Management (FRBM) initiative of 2003 promulgated by the Vajpayee government.

Second, India needs a strategy that moves away from spending to one that focuses on recreating the spirit of enterprise, where the government is a careful targeted spender. Third, the government must inculcate a sense of purpose and a culture that recognises they are trustees of public money, not owners, and therefore, set standards for disclosures and transparency in all deals.

The government can be a catalyst by creating a framework of transparency and institutions, which make investors confident about investing and competing.

The simple truth about growth is that it is based on the template of efficiency. Unless the core concerns of investors — governance, profligacy, outcomes, corruption — are not addressed, growth will lurch cyclically. As events are showing us, sloganeering and profligacy are not the right ingredients for sustainable growth. The economy and a new vision and leadership for it should be a key issue.

Rajeev Chandrasekhar is a Member of Parliament, Rajya Sabha. The views expressed by the author are personal.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Virupaksha » 25 Sep 2013 11:04

vishvak wrote:So its all ad-hoc in oil pricing. There is no WTO looking on there and passing structures against oil Mafia.

Only the mafia exists in the oil world.

OPEC, with russia as an adjunct and Soudi as big daddy.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Pratyush » 25 Sep 2013 12:15

Why the helicopter economics of NREGA doesn’t work

A sawal to the economics gurus, is what is mentioned in the op ed credible? Or just a whole lot of hot air?

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 25 Sep 2013 21:05

Pratyush wrote:Why the helicopter economics of NREGA doesn’t work

A sawal to the economics gurus, is what is mentioned in the op ed credible? Or just a whole lot of hot air?

Nothing new in the article that hasn't been discussed here before. Increase in money supply without any significant gain in productivity results in localized inflation. Some of us, including me, said that, almost verbatim, during the spirited NREGA debates of the past.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby gakakkad » 25 Sep 2013 21:24

Pratyush wrote:Why the helicopter economics of NREGA doesn’t work

A sawal to the economics gurus, is what is mentioned in the op ed credible? Or just a whole lot of hot air?



what is said is good..just that is has been discussed several times in here in the past..

One must understand the difference between money and economy,which our policy makers have clearly not understood... economy constitutes goods and services of the country....while money is merely the medium to exchange goods and services amongst the population... MNREGA does not increase the goods and services in the country..it merely increases money which is the medium to exchange goods and services...

The situation that Cantillon talks about is very similar to what western central banks around the world have been up to over the past few years.



the Indian situation differ from the western situation....in west the economy has more goods and services than required by the population...i mean everyone is fed and clothed...so the government has to do something to ensure that people are driven to buy what they don't need...(gucci bags for instance)...so they have to keep printing currency to ensure that people have money left after roti,kapdaa and makaan to buy gucci bags...so that people in the business of making stuff that no one really requires (the gucci bags maker) stay employed...hence measures like quantitative easing...

someone asked if quantitative easing would work in India...it would not...because the goods and services produced in India do not fulfil the consumption requirement. there is not enough food,clothes ,education, etc to meet the requirement of everyone ...so if we print money,or undertake something similar to qe ,than people would start demanding stuff they don't really require...but simply printing money would be insufficient to increase the production of goods and services...so how do we keep up with the increased demand ? in some cases we import stuff...like consumer electronics...notice how massively have imports for electronic goods increased ? but importing leads to depreciation of currency...something which has happened in India...NREGA in many ways is like a qe exercise...both are examples of expansionary monetary policy...one might argue that goi borrows at high interest rates...but does not inflation negate the high interest rates ?


econ 101 onlee...

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Adrija » 25 Sep 2013 22:07

Excellent analysis, gakakkad saheb

India is suffering from supply constraints, which things like NREGA do nothing to solve, in fact make worse....so the correct thing would have to use all these programs to create rural and urban infrastructure........that would have led to both short term improvement and long term capacity creation...right now we have just pissed away/ embezzled the monies

While the US/ Europe suffer from the exact opposite (i.e. demand constraints, as you mentioned), ironically enough the remedy is actually exactly the same......invest in upgrading infrastructure directly. That would have led to enhanced capacity utilization, and hence sparked a virtuous cycle of corporate investment and jobs as well as long term productivity enhancement........but there - thanks to the Financial fat kats - monetary rather than fiscal expansion has happened and the financial fat kats have become even more fat........and the mango Joe is still suffering

Ah well, life plays cruel ironies sometimes...

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Theo_Fidel » 25 Sep 2013 22:14

^^^
+100

That is exactly correct.
This is what is lost in all the demagoging.

MNREGA is the worst kind of digging holes and filling holes.
By resorting to compulsory manual labor it destroys human effort and economic ability.
Only from the minds of the unemployable Jean Dreze type fools.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vishvak » 25 Sep 2013 23:05

Adrija ji, there is 1+1 right there in two paragraphs in terms of lack of capabilities building and consumption and the situation in India is driven by few parties for electoral gains.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby gakakkad » 25 Sep 2013 23:09

the way forward for India is a simple concept...infrastructure and trained personnel to utilise the infrastructure in a productive way...so it is infra+education....no amount of jugglery with monetary policy can take India forward...monetary policy can be tailored to help India build the necessary roads,bridges,powerplants,universities etc... and enable businesses to borrow money at comfortable rates...but is by no means a substitute for sound administration ...

on an earlier post by TF..

>>BTW that drop of agriculture to 13% of GDP is a good thing not a bad thing. Technically a Credit to the UPA.

i agree that falling proportion of agriculture in the gdp means that country is going toward becoming a developed economy...but in case of Yindia this is misleading...


agriculture in India ,still has a massive room for growth...I mean nominally and not as proportion of GDP...the yield/hectare has to treble..the total cultivated area has to go down...agriculture in Yindia suffers from a phenomenon called disguised chronic unemployment which you surely know well...10 people doing the work of what 1 combine harvestor can do is disguised chronic unemployment...9 people should technically be considered unemployed...we need those 9 in manufacturing...the real unemployment rates in India be close to 50% if these factors are taken into account...demographic dividend anyone? when half our labour force is doing nothing..(and i did not mention wimmin,who many a times are not even allowed to enter labour force..)

so agriculture has to grow..and grow modern....services and manufacturing have to grow even faster...to absorb the population which was previously (un)employed in agro...

reason why the share of agro has come down , is because agro has underperformed even more than services or manufacturing....

people once argued that our economy is like the western economies as we have high proportion of services...which is basically due to a massively under-performing manufacturing sector...

our trumpcard however is the unaccounted ,unorganized sector...maid servants working in Indian household can be considered a part of the unorganized service sector...they cook food in 3-5 houses ,clean up and wash clothes...if our economic policies can somehow get these maid servants, to open a laundromat ,than they can be responsible for doing laundry of 100 houses maybe...would increase the demand for washing machines...and would increase the demand ready to eat parathas commonly available in various indian grocery stores in khanate..as the maid servant would no longer be available to cook food as she would make lot of moeny from the laundromat...and hence boost agro based manufacturing sector...providing productive employment for a change...

every indian city employes 1000s of people as traffic police...whose job is to direct the traffic..a job which they do pathetically...a classic example of disguised chronic unemployment in the service sector...since a computerised traffic management system can easily replace them ,freeing them for more productive task..(like writing code for the traffic management system..:) of course we need to educate them and train them to do that...

if we need to take advantage of the so-called demographic dividend,we need good old fashioned dedication to infra and education and proper policy that supports businesses.. no short cuts...especially not gimmicky monetary short cuts..

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Prem » 26 Sep 2013 02:29

http://www.business-standard.com/articl ... 287_1.html
Hyundai India receives Top Exporter Award

HMIL began exporting cars in 1999 and by exporting the 1,000,000th car in February, 2010; HMIL became the ‘Fastest’ Indian passenger car manufacturer to achieve this remarkable milestone in record time. HMIL is the largest passenger car exporter since 2004, leading with a market share of 48% making it a significant contributor to the Indian Automobile Industry. HMIL in CY 2012 exported 250,005 cars to diverse markets such as Latin America, Middle East, European Union and Africa.Speaking on the occasion, Mr B S Seo, MD & CEO, HMIL said, “We are honored and delighted to receive this prestigious award from EEPC India. The award symbolizes and showcases Hyundai’s global success story. I take this opportunity to thank all our customers and stakeholders for their trust and support which has facilitated us in reaching this milestone.”HMIL forms a critical part of HMC’s global export hub. HMIL currently exports to around 125 countries across EU, Africa, Middle East, Latin America, Australia and the Asia Pacific. Currently, HMIL exports around 40% of its total production to overseas markets. HMIL's fully integrated state-of-the-art manufacturing plant near Chennai boasts of advanced production, quality and testing capabilities.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby M Joshi » 26 Sep 2013 17:49

Image

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Re: Indian Economy - News & Discussion 27 May 2012

Postby RamaY » 26 Sep 2013 18:32

gakakkad wrote:>>BTW that drop of agriculture to 13% of GDP is a good thing not a bad thing. Technically a Credit to the UPA.

i agree that falling proportion of agriculture in the gdp means that country is going toward becoming a developed economy...but in case of Yindia this is misleading...


agriculture in India ,still has a massive room for growth...I mean nominally and not as proportion of GDP...the yield/hectare has to treble..the total cultivated area has to go down...agriculture in Yindia suffers from a phenomenon called disguised chronic unemployment which you surely know well...10 people doing the work of what 1 combine harvestor can do is disguised chronic unemployment...9 people should technically be considered unemployed...we need those 9 in manufacturing...the real unemployment rates in India be close to 50% if these factors are taken into account...demographic dividend anyone? when half our labour force is doing nothing..(and i did not mention wimmin,who many a times are not even allowed to enter labour force..)

so agriculture has to grow..and grow modern....services and manufacturing have to grow even faster...to absorb the population which was previously (un)employed in agro...

reason why the share of agro has come down , is because agro has underperformed even more than services or manufacturing....


Fully agree.

Assumption: Please see the data source mentioned below. I am assuming all these numbers are adjusted to inflation (they say 2004-05 prices).
Data Source: http://planningcommission.nic.in/data/datatable/

What we really need is the productivity improvements in Agri-sector. Whether it translates into the decreasing share of Agri-sector in overall GDP or not is immaterial; it would in general but it is not the real indicator.

In the past 40 years (1971-2012) agri-sector grew at an average of 3.1%. Assuming Agri-sector is reducing its resource pool (land, workers etc.,) to industrial sector, then this is a respectable growth (meaning some growth even with reduced resources).

At the same time the industrial sector (Mining, Industry and Manufacturing combined), which logged an average growth of 6.1%, could have done better for this sector got additional inputs of resources (human, capital etc.,).

Another pet idea of mine is to transform agri-sector into a 4th gen sustainable economy sector; especially by combining the whole supply chain and by making farmers, innovators, engineers, businessmen all into one.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Altair » 26 Sep 2013 18:35

Why the sudden love for Mango Indian?
RBI bans 0% interest scheme on purchase of consumer goods

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Re: Indian Economy - News & Discussion 27 May 2012

Postby RamaY » 26 Sep 2013 18:40

gakakkad wrote:our trumpcard however is the unaccounted ,unorganized sector...maid servants working in Indian household can be considered a part of the unorganized service sector...they cook food in 3-5 houses ,clean up and wash clothes...if our economic policies can somehow get these maid servants, to open a laundromat ,than they can be responsible for doing laundry of 100 houses maybe...would increase the demand for washing machines...and would increase the demand ready to eat parathas commonly available in various indian grocery stores in khanate..as the maid servant would no longer be available to cook food as she would make lot of moeny from the laundromat...and hence boost agro based manufacturing sector...providing productive employment for a change...


This is already happening in Apartments, especially in Andhra. The whole community (Chakali = Laundrymen) got transformed into watchman cum servant-maid cum laundromat cum car-wash service. Each family is earning in the ball-park of Rs 20k per month after free accommodation, free-food (generally given by apartment people), sometimes free education for children.

This is used to happen in villages as well. The only transformation is that now each apartment complex in a city (100 apts) is a small village on its own.

This model can easily be taken to Villages where Govt facilitates the apartment-like culture come in villages with less foot print for houses thus making space for public amenities like parks, schools, play grounds etc.,

Right now the foot print of human-dwellings is too much compared to public spaces.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Theo_Fidel » 26 Sep 2013 18:42

Looks like we needs Morarji Desai, the tough man of India back. No wait... ..heh... :-)

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Re: Indian Economy - News & Discussion 27 May 2012

Postby chetak » 26 Sep 2013 18:43

Altair wrote:Why the sudden love for Mango Indian?
RBI bans 0% interest scheme on purchase of consumer goods


In one example worked out on TV yesterday the actual annualized interest on this scheme was more than 32%. Go figure. :twisted:

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Altair » 26 Sep 2013 18:47

chetak wrote:
Altair wrote:Why the sudden love for Mango Indian?
RBI bans 0% interest scheme on purchase of consumer goods


In one example worked out on TV yesterday the actual annualized interest on this scheme was more than 32%. Go figure. :twisted:


I know that fact but still does not explain the sudden love?

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Uttam » 26 Sep 2013 21:09

Altair wrote:I know that fact but still does not explain the sudden love?


This is pretty much intended to control inflation and improve banks balance sheets and it has not much to do with the interest rates charged to consumers. 0% schemes attracts who may not have wherewithal to maintain the payment schedule, plus the consumer is more likely to pay when they have put in some up front. The increase in the likelihood to pay also improves banks' balance sheet.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vina » 27 Sep 2013 11:07

Rats! Karnataka ranked as a "Less Developed State" in the recent development report , firmly clustering in the tier II states, while surrounded by Tier I states (Maharahstra, Goa, TN and Kerala)!

Shame !! Karnataka is really two states in one, the coast, kodagu and old mysore areas will be definitely top tier and you have North Karnataka clustering with the likes of the BIMAROU states bringing the average down!

If only the BJP govt under Yeddy had crash industrialized No Karanataka , instead of being focused on other things, it could have been different. Yeddy frittered away a golden opportunity. Now we have the likes of Siddharamiah doing the same old same old of doles and "welfare handouts" and more tax and spend and no idea /imagination whatsoever of moving the numbers.

And in addition this govt seems to be nuttier than a fruit cake, with the endeavor being focused on moving the IT industry from Bangalore to 2nd tier city. If there is a bigger fool's errand, I haven't heard of it. And then there is this toxic rhetoric coming out of "forcing" the IT industry to employ "locals" . Together, it is so incredibly stupid that it has all the hall marks of killing the goose that lays the Golden Eggs.

Moving Infy to Gulbarga ! Can anyone think of anything more daft ? Buffoons have no imagination in getting big manufacturing and large scale industries with big labor intensity there in Karnataka (oops, that will actually require these clowns to actually do things like answer questions about land, water and power and roads and infra), but want a free ride on IT and it's success. Basically the redistribution "buddhi" at work . Take IT and spread it thin across KTK ! Not viable and wont happen.

The sooner they kick out the old coots like the current IT minister here and appoint a younger, more dynamic and forward looking person with some grey matter between his ears, the better. If not, in the best case,we will have the stagnation and woes of the current (more of the same old) and in worst case inflict serious and irreparable damage if some quixotic quest to "impose locals only (does that mean the MLA/MP chamchas and fellows from his constituency ?" on the Industry and spread it out to random places.
Last edited by vina on 27 Sep 2013 12:33, edited 1 time in total.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Christopher Sidor » 27 Sep 2013 12:33

RBI focus still on currency stability ---- Hindu Dated 27-Sept-2013
Rajan Seen Switching Main India Inflation Gauge at RBI ---- Bloomberg Dated 27Sept2013

Thank god there is some sanity in RBI. And it is good that RBI is moving from WPI to CPI. CPI is what we pay for not WPI which is a meaningless figure as far as Aaam Admi are concerned.

Let us hope that GoI also complements RBI actions rather than ranting all over the town about how RBI's high interest rates are killing growth. Right now the focus ought not to be on growth. It should be on stability and shoring up our defenses against the coming onslaught of the inevitable tapering of QEIII and rising interest rates. Our currency has declined massively and this has pushed people to buy Gold, Real Estate just to beat inflation and retain some value of their savings. There is a storm coming and we have to batter down our hatches.

Rajan Seen Switching Main India Inflation Gauge at RBI ---- Bloomberg wrote:The success of that effort lies beyond Rajan’s control as subsidies stoke government spending, which poses a risk to the inflation fight, said Ashutosh Datar, an economist at brokerage India Infoline Ltd. in Mumbai.

“The central bank is moving in the right direction,” said Arun Singh, an economist at Dun & Bradstreet Information Services India Pvt. in Mumbai. “Now it’s the government’s turn to act responsibly on the fiscal side and step up efforts to ease bottlenecks to address the drivers of inflation.”

A large part of the mess that we are in can be laid directly at the hands of GoI and especially the various State governments. For example in Bangalore a metro service whose construction was supposed to start in 2005 has managed to achieve next to nothing in more than 7 years of its existence. Where a ring metro along the Bangalore outer ring from Hebbal to Silk Board and beyond should have been in phase II it has been pushed back to Phase IV and beyond. This list goes on and on. Due to the lack of metro people are forced to commute using their own vehicles pushing up pollution levels and fuel consumption.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Adrija » 27 Sep 2013 12:55

Yes.......I must admit I was a bit sceptical when he was appointed, but his Policy has addressed quite a few of my fears.......has bene quite good in fact

Of course, as you mentioned, his influence is limited to the monetary side, but if he continues to retain his courage of conviction/ clarity of thought displayed in the policy, then he will make things difficult for a profligate sarkar...

Slowly, my friends, slowly.........but our stars seem to be falling in place for Bharat mata/ Mother India...this and hopefully next NaMo...

Will stop here before Suraj comes down on me for polluting his sacred space :mrgreen:

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Pratyush » 27 Sep 2013 12:59

Vina Ji,

People get the gobermounds they elect. So don't worry. Have curry.

Also, I don't have to tell you, that all politics is economics and all all economics is politics.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby panduranghari » 27 Sep 2013 14:37

Christopher Sidor wrote:
Thank god there is some sanity in RBI. And it is good that RBI is moving from WPI to CPI. CPI is what we pay for not WPI which is a meaningless figure as far as Aaam Admi are concerned.

.


Please using this link http://anonymouse.org/anonwww.html got to http://www.bbc.co.uk/programmes/b039rwd0 and start listening from 9.00 minutes.

Very pertinent.

GDP deflector makes the use of CPI, RPI, WPI all meaningless.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Yagnasri » 27 Sep 2013 15:31

There is strong talk that Arthakranthi ideas are being seriously looked into by the BJP. any news on this?

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Atri » 27 Sep 2013 17:25

I earnestly wish that arthakranti ideas take root...

they should begin with removing 1000, 500 and 100 rupee notes.. very urgent.. there is a big scam, ever since sonia took over.. She introduced 1000 rupee notes, and started giving contract of printing and designing notes to a london based company which also prints and designs currency notes for Pakistan. it is a huge scam which underlies all this mud..


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Re: Indian Economy - News & Discussion 27 May 2012

Postby Austin » 27 Sep 2013 17:28

Right level of rupee is 59-60, says Chidambaram
The "right level of the rupee" which has made a dramatic recovery since Raghuram Rajan took over as the new Reserve Bank of India Governor is 59-60, Finance Minister P Chidambaram said today.

The rupee had hit an all-time low of 68.85 on August 28, but since then gained 9 per cent.

Mr Chidambaram had all along maintained that the rupee overshot its true levels. He once again reiterated today that the rupee should not fall beyond the 59-60 level.

This is for the first that a policymaker has spelled out a desired level of the rupee against the dollar.

However, the desired levels are still below where the rupee was trading a few months back. At the end of May it was hovering around 56, by the end of June it had breached the psychological 60-mark and in August it went from 60 to 68.

The rupee has been hovering around 62 levels for the last five days.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Arunkumar » 27 Sep 2013 18:40

Atri, 1000 rs note were introduced by NDA in year 2000. Though I agree they should be withdrawn.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby subhamoy.das » 28 Sep 2013 08:30

This is aimed at cutting demand of goods with high important content to reduce CAD.....This was coming as I predicted several posts ago!


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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 29 Sep 2013 23:58

Economist: Hidden Value
THE chief architect of India’s constitution, B.R. Ambedkar, once said its villages were “a den of ignorance, narrow-mindedness and communalism”. Now some think they are the strongest bit of the economy. Neelkanth Mishra, an analyst at Credit Suisse, reckons that, if activity in informal industries and rural areas were properly measured, India’s GDP would look bigger and more stable and the present slump less severe. This is a source of comfort at a time when India is fighting a financial panic.

India’s villages and towns, far from the gaze of foreigners and the urban elite, have been on a tear. Over the past decade new roads have been built. Almost everybody these days has a mobile phone. Electricity has become more common, as have computerised land records. Fewer people have to spend time collecting firewood, using bottled gas instead. New houses built with walls and floors of brick or cement are more durable than wooden huts, and need less maintenance.

It means people can turn their energy to starting businesses and escaping subsistence farming. Poultry production is booming, as it has become easier to get chickens to market. Villagers eat more processed food—India’s artery-clogging pudding, gulab jamun, now comes in packets, made in small factories in nearby towns. Better communications are vital. Mr Mishra compares two villages 15 kilometres (9 miles) apart, near the city of Bhopal in central India. One has been connected to the road network since 2009. The other just has a dirt track. In the first, land prices are three times higher, wages are 50% higher, and far more people commute and engage in market gardening.

Official figures occasionally offer glimpses of the transformation. For instance, fewer than half of workers now say they are farmers. Yet statisticians struggle to capture the change. Measuring an economy in which the informal sector generates half of output and over nine-tenths of jobs is a tough task. The GDP data depend on infrequent surveys of productivity.

Soon, however, the figures will go through one of their periodic rebasings. The last rejig was in 2004-05. Mr Mishra thinks the next one could revise India’s GDP up by 15%. Pronab Sen, chairman of the National Statistical Commission, reckons it will be perhaps 8%—in line with earlier revisions, although he adds that the spread of mobile phones and their economic effect makes things unusually uncertain this time. Raghuram Rajan, the new head of India’s central bank, reckons a revision of 10% is possible.

A bigger economy is good news, but it raises two questions. First, can the informal economy be insulated from the problems affecting the rest of India? Urbanites grumble that the rural boom is due to unsustainable handouts, in particular a government scheme to guarantee work for the rural poor. This seems unlikely—the annual budget of the scheme in question is worth just 0.3% of GDP. But there are signs the informal economy has slowed. Annual wage growth for unskilled rural men is down to 16% from a peak of over 20%. The hope is that heavy rains in July and August will mean a good harvest. In anticipation of this, tractor sales have been strong.

The second question is how swiftly India can bring its black economy into the daylight. Informality imposes costs. Few people pay tax, hurting the public finances. Because so many people rely on moneylenders to borrow, and gold to save, the central bank has little control over swathes of the economy, making it harder to fight inflation. Meanwhile, tiny informal firms, however perky, lack economies of scale. It limits their potential.

Note the reference to the GDP being raised by 10-15% with the next base year revision, due to more economic activities being formally measured, compared to the last one in 2004-05, which was essentially just the second year of a decade long phase of high growth.

Suraj
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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 30 Sep 2013 20:46

One of the factors enabling the 5x growth in exports over the last decade has been the dramatic growth of private ports, which helped exporters circumvent the bottleneck of state owned ports:
Private ports growing faster
In the 1990s, they were minor ports, then they became non-majors and soon, they will be known as the country’s real major ports.

Twenty years ago, minor ports handled just eight per cent of the country’s cargo traffic. Last fiscal, not only did their share soar to 42 per cent, but they also overtook their big brothers -– the government -owned major ports – in traffic growth.

In 2012-13, non-major ports handled 390 million tonnes, registering a nine per cent growth over the previous year. During the same time, the 12 major ports reported a 2.5 per cent drop, to 545 million tonnes.

What’s more, if the current trend is any indication, the private sector Adani port in Gujarat may emerge the largest in the country in cargo throughput, beating its public sector neighbour Kandla port, which handled 93 million tonnes last year.

The Adanis have set a target of 100 million tonnes for the current fiscal, about 20 per cent growth over its throughput of 83 million tonnes last year. Interestingly, this volume was more than the combined traffic handled by three major ports – Kochi, New Mangalore and Ennore.
...

The combined throughput of all ports grew only a modest two per cent to 934 million tonnes in the year to March 2013. This clearly indicates the migration of cargo from major ports to non-major ones. Private ports are seen more aggressive and investor-friendly as they are not subject to tariff regulations like the major ports.

In the past two decades, several private ports have come up in Gujarat, Andhra Pradesh and Tamil Nadu. It was the State Maritime Board in Gujarat that took the lead in developing private ports. The Pipavav port, which started operations in 1998, was the first state level PPP port in Gujarat. Pipavav is now run by APM Terminals, which took over it in 2005. Many other ports such as Mundra, Hazira, Dahej and Reliance captive port at Sikha have come up subsequently.

In Maharashtra, which is home for two major ports — Mumbai and JNPT, the private sector has not been as aggressive as in Gujarat. However, some new ports like Dighi near Mumbai and Jaigad in Ratnagiri have started operations.

The east coast also attracted private capital in the port sector. Ports such as Krishnapatnam, Gangavaram and Kakinada in Andhra Pradesh, Dhamra in Odisha, Karaikal in Puducherry and Kattupalli in Tamil Nadu have added large capacity.
...

In the mid-1990s, the Centre realised that the capacity of ports will not be enough to handle the increase in cargo traffic as the economy grew. In 1996, the government decided to go for partial privatisation of major ports. The first private terminal in a major port was set up at the Jawaharlal Nehru Port by P&O Ports Australia in 1999. After six years, DP World, Dubai, took over it as part of a global buy-out of P&O assets.
...

A major weakness of the government-owned ports has been their management structure. Under the board of trustees, they were not operating like commercial organisations. Recognising this, the government in the late 1990s decided to corporatise the ports. But the move was opposed by vested interests and till today, except Ennore Port, which was set up as a company, all others remained trust-managed.

In the early 1990s, ships had to wait for days at ports like Mumbai, Kandla and Kolkata to get a berth. In normal times, the turnaround time for ships used to be more than a week. Most ports had huge labour force. With capacity expansion, reduction in labour force and efficiency brought in by private global terminal operators, the situation has improved a lot.

Yet, nearly 40 per cent of Indian exim cargo is transhipped through Colombo, Dubai and Singapore ports. This adds to the freight cost for Indian trade.

To avoid this, the government decided to develop transhipment ports first at JNPT and later at Vallarpadam in Kochi. The Cabotage rules that prevented foreign ships from operating feeder service along the coast were relaxed for Vallarpadam. However, both these ports are yet to attract large mother ships due to various reasons, including draft limitations.

The optimism over the growth in cargo traffic has prompted the UPA government to approve two more major ports on the east coast. It would benefit trade a lot more if the Centre focuses on making its existing ports efficient, before going in for new ones.

svinayak
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Re: Indian Economy - News & Discussion 27 May 2012

Postby svinayak » 30 Sep 2013 21:12

http://www.dddmag.com/news/2013/09/us-p ... -practices

U.S. Pharma Urges Obama to Address India’s Trade Practices
Fri, 09/27/2013 - 12:29pm

The Biotechnology Industry Organization (BIO) and the Pharmaceutical Research and Manufacturers of America (PhRMA) joined several other business organizations in sending a letter to U.S. President Barack Obama urging him to address India’s discriminatory trade barriers and weak intellectual property (IP) protection during his meeting with India’s Prime Minister Manmohan Singh on Friday.

“India’s discriminatory trade policies put American businesses at a disadvantage, place manufacturing jobs at risk, and jeopardize India’s ability to grow its economy,” said Linda Dempsey, the Alliance for Fair Trade with India (AFTI) co-chair and National Association of Manufacturers Vice President of International Economic Affairs. “The business community, elected officials, and the administration are united in their concern with these protectionist policies. We urge President Obama to seek immediate and concrete solutions that can lead to growth in the American and Indian economies alike.”

In the letter, the organizations highlight India’s harmful trade policies which include a failure to protect IP rights, forced local production of certain information technology and clean energy equipment, and revocations of patents and compulsory licenses for innovative medicines. These unfair policies are designed to benefit a few Indian corporations at the expense of manufacturing and jobs in the United States and other countries around the world.

“In the last 18 months, India has consistently failed to recognize international intellectual property rights, hindering India’s path to an innovative and knowledge-based economy,” said Mark Elliot, co-chair of AFTI and executive vice president of the U.S. Chamber of Commerce’s Global Intellectual Property Center. “During his meeting with Prime Minister Singh, President Obama has the opportunity to promote a trade environment that fosters innovation and creativity, creates high-quality jobs, and advances global economic development.”

The organizations’ letter adds to the growing chorus of widespread, bipartisan calls for action. Also this week, a bipartisan group of governors highlighted the impact India’s unfair trade practices have on jobs in states across the U.S. in a letter to President Obama. Additionally, more than 170 U.S. representatives and 40 U.S. senators expressed concern with a trade environment in India that puts American jobs and industries at risk in letters to the administration earlier this year.

Business organizations signing the letter are: American Business Conference (ABC), American Foundry Society (AFS), Association of Equipment Manufacturers (AEM), Biotechnology Industry Organization (BIO), California Manufacturers & Technology Association, CropLife America, Emergency Committee for American Trade (ECAT), INDA, Association of the Nonwoven Fabrics Industry, Information Technology Industry Council (ITI), Motion Picture Association of America (MPAA), National Association of Manufacturers (NAM), National Electrical Manufacturers Association (NEMA), National Foreign Trade Council (NFTC), Pharmaceutical Research and Manufacturers of America (PhRMA), Recording Industry Association of America (RIAA),Solar Energy Industries Association (SEIA), Telecommunications Industry Association (TIA), and the U. S. Chamber of Commerce.

Vayutuvan
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Re: Indian Economy - News & Discussion 27 May 2012

Postby Vayutuvan » 30 Sep 2013 21:25

What does "forced local manufacture" mean?

Theo_Fidel

Re: Indian Economy - News & Discussion 27 May 2012

Postby Theo_Fidel » 30 Sep 2013 22:58

Suraj wrote:One of the factors enabling the 5x growth in exports over the last decade has been the dramatic growth of private ports, which helped exporters circumvent the bottleneck of state owned ports:
Private ports growing faster


India must be commended for the speed at which the new ports were authorized and built. In the west it can take 10+ years to do just the environmental study on a new port. For instance the attempts to export coal from the west coast are in such reviews right now and earliest date of export is 2018 IIRC.

No improvements will happen to Chennai port as long as AMMA is in power. The port is doomed to over congestion and is almost unusable right now. I don't understand how such a smart lady can be so dense and hard headed. Last week there was yet another demonstration by the port workers demanding the link roads be built. She frittering away political capital for no reason.

The only hope now is Ennore port and Kattupalli port. Fortunately the car manufacturers have quickly shifted to Ennore. Right now something like 200,000 cars are exported every year from Ennore. L&T will undoubtedly try for a chunk of this action.

The latest commercial arrival at Kattupalli. The Westward link road is yet to be done, so the Ennore Manali road has to be used, which is congested.
http://www.thehindu.com/news/national/t ... 157404.ece

Suraj
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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 01 Oct 2013 01:13

Core industry growth rises to 5-month high of 3.7%
Pulled down by the contraction in crude oil and natural gas production, the eight core industries’ output growth slowed down to 3.7 per cent in August, lower than 6.1 per cent growth recorded in August last year.

But, the latest monthly performance is a five-month high and better than the 3.1 per cent growth seen in July this year.

For April-August, eight core industries’ output grew 2.3 per cent, much lower than the 6.3 per cent recorded in same period last year. The eight core industries have a weightage of about 38 per cent in the Index of Industrial Production.

For August 2013, crude oil and natural gas production contracted by 1.5 per cent and 16.1 per cent, respectively. Refinery products expanded by 4.9 per cent (31.8 per cent)

Cement output grew 5.5 per cent, while steel production grew 4.3 per cent.

Coal and electricity production grew 5.5 per cent (11.8 per cent) and 6.7 per cent (1.9 per cent), respectively, in July 2012. Fertiliser output grew 1.7 per cent (-2.1 per cent).

Some good news on CAD, fiscal deficit still a worry
Official data released on Monday showed a lower-than-expected increase in the CAD, which is likely to boost both the currency and bond markets. The current account is the broadest measure of trade, tracking goods, services and investment income.

But an unbridled surge in Government expenditure meant that the fiscal deficit, at Rs 4.04 lakh crore in the April-August period, was already 74.6 per cent of the full-year estimate of Rs 5.42 lakh crore.

With the Government’s non-Plan expenditure continuing to rise, and further big ticket expenses due in the remaining seven months of the financial year, Chidambaram is going to find it tough to control the fiscal deficit at the targeted 4.8 per cent of GDP in the current fiscal.

The CAD numbers also do not look good on closer scrutiny. During the first quarter of the current fiscal (April-June), the CAD rose to $21.8 billion, or around 4.9 per cent of GDP, sharply higher than the 3.6 per cent logged in the immediate preceding quarter.

However, helped by some contraction in gold imports, and a surge in exports thanks to a global recovery and a sharply fallen rupee, which made Indian exports more competitive, this was much lower than the $25-30 billion estimated by various analysts. Also, the prospects look better, going forward.

As Sidharth Birla, Senior Vice-President of FICCI, pointed out: “In July and August, exports registered double digit growth and there has been a sizable contraction in the import demand for gold. With the global economic situation on the mend, our exports should continue to march ahead in the coming months. Further, with the Oil Ministry coming out with a comprehensive oil conservation plan, we could see a dip in oil imports in the subsequent quarters. Such measures would have a salutary impact on CAD.”

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Re: Indian Economy - News & Discussion 27 May 2012

Postby kmkraoind » 01 Oct 2013 10:51

Ahead of food security Act, FCI forced to borrow from banks for daily operations

Sources told FE that till date, the government owes more than Rs 32, 650 crore to FCI that has made the corporation go for short-term loans.

Sources said all outstandings to FCI by the finance ministry has been settled till 2011-12.

Due to accumulated dues of Rs 32,650 crore, the FCI paid more than Rs 6,000 towards interest payment on its loans last fiscal. These delays in settlement in dues from the finance ministry comes at a time when the FCI is required to take up bigger operations for the implementation of the food security legislation. The law, which aims to supply 62 million tonnes of highly subsidised rice, wheat and coarse cereals to about 84 crore of the population, is expected to cost around Rs 130 ,000 crore annually.


Already UPA has utilized nearly 75% of fiscal deficit amount in 5 months. Now they are doing some cooking up figures. By this rate, we may cross fiscal deficit by December.

People who have wisdom have no power, and people who are illiterate and deceptive have all power. We are truly facked in this regard.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby manish » 01 Oct 2013 20:11

Theo_Fidel wrote:
India must be commended for the speed at which the new ports were authorized and built. In the west it can take 10+ years to do just the environmental study on a new port. For instance the attempts to export coal from the west coast are in such reviews right now and earliest date of export is 2018 IIRC.

Don't worry saar, we are getting there.

Already in 2011-12 the sarkaar in dilli has mandated that any new Environmental Impact Study (EIA) being carried out as part of the Environmental Clearance (EC) process for a port must have the EIA study conducted over the course of at least one full year. And that is only a small part of the overall EC process. Good luck with securing other approvals (secretive IB clearances anyone?)and achieving financial closure in time to make the whole project worthwhile. This was one of the factors that has delayed the Cheyyur UMPP (4000MW) which was supposed to have a captive port of ~16-20MMTPA.

The boom in port construction was effectively ended around 2009-10 with projects such as Krishnapatnam, Gangavaram, Karaikal & Dhamra winding down development to start ops and no new major greenfield port has been initiated or completed since around then. The advent of the 'National Green Tribunal' or NGT as it is known effectively killed/stalled for a long time about 5-6 large coal powered thermal projects of 1000MW+ each in one fell swoop last year along the TN coast, effectively killing with it a lot of dry bulk port capacity of both green and brown field kind.

Theo_Fidel wrote:No improvements will happen to Chennai port as long as AMMA is in power. The port is doomed to over congestion and is almost unusable right now. I don't understand how such a smart lady can be so dense and hard headed. Last week there was yet another demonstration by the port workers demanding the link roads be built. She frittering away political capital for no reason.

The only hope now is Ennore port and Kattupalli port. Fortunately the car manufacturers have quickly shifted to Ennore. Right now something like 200,000 cars are exported every year from Ennore. L&T will undoubtedly try for a chunk of this action.

The latest commercial arrival at Kattupalli. The Westward link road is yet to be done, so the Ennore Manali road has to be used, which is congested.
http://www.thehindu.com/news/national/t ... 157404.ece

The problem for the automotive industries in and around Chennai has got more to do with the road/rail access to ports than the infra at the ports themselves. Car carriers and car exports don't require very high end infra that one may desire for high volume container/dry bulk handling for example.

As a very senior Hyundai India executive once told me, his biggest challenge was getting the cars to Chennai port and not the port per se. The roads in Chennai are congested and narrow plus there are restrictions on movement of goods vehicles through cities during daytime. I remember suggesting trying out dedicated car carrying rakes but Hyundai did not have a dedicated rail siding at its plant back then. This was 2010. That perhaps still is the only long term eco-friendly and cost-effective solution for the car exporters ex-Chennai.

I don't think much has changed still. And shifting to Ennore or L&T Kattupalli would do little to help the situation. If anything, both these ports have bigger problems with not only road access but with rail access as well due to presence of some bottlenecks along the rail route that limit daily throughput capacity.


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