Indian Economy: News and Discussion (Jan 1 2010)

vera_k · Post by **vera_k** » 14 Jan 2011 11:52

First, there is the return of the “twin deficits” problem after almost two decades during which one of them, the current account deficit (CAD) in the balance of payments, was muted. Second, the latter half of 2010 has seen the resurgence worldwide of energy and food inflation. Third, the proliferation of major scams and scandals (telecom 2G spectrum allocation, the Commonwealth Games, the Adarsh Housing Society, the Radia tapes and so on) has further weakened the government’s ability to take and execute decisions in all areas, including economic. Fourth, an activist environment ministry has sharpened the conflict between development and the environment, including through a number of high profile retrospective challenges to major investment projects. Last, but not least, economic reforms appear to have stalled completely.

Singha · Post by **Singha** » 15 Jan 2011 15:30

http://online.wsj.com/article/SB1000142 ... TopStories

gujarat investments...

Theo_Fidel · Post by **Theo_Fidel** » 17 Jan 2011 06:00

I'm a little bummed that India's per capita growth will only be 130%. Here I was thinking it would be more like 500%.

Look at the US in 2030.

Oh! & courtesy of the Business Week.

astal · Post by **astal** » 17 Jan 2011 06:22

OT post. Deleted

Theo_Fidel · Post by **Theo_Fidel** » 18 Jan 2011 06:00

Ayoo! What now...

http://www.business-standard.com/india/ ... th/422088/

Onion prices fall 33% this month

Onion prices declined nearly 33 per cent since the beginning of the month because of increased supply from major producing centres.

On Monday, the commodity was traded between Rs 2,200-3,000 per quintal in Lasalgaon, the largest spot mandi in Nashik district. About 1,100 tonnes of onions arrived today – a 22 per cent rise, from about 900 tonnes on January 5 – from across Maharasthra. A trader said arrivals from Gujarat has also started and it would ease prices further.

In Vashi Agricultural Produce Marketing Committee (APMC) market, the commodity plunged to quote between Rs 20-40 per kg depending on the quality and size. Onion with high moisture and soil content was traded for a minimum price while fresh goods without soil were offered at a premium. Total arrivals were recorded at 110 trucks between 5-10 tonnes each in Vashi.

Arrivals are likely to increase as the weather has become conducive for harvesting farm commodities. The days are sunny which helps farm labourers to work in the field with ease. Prices will decline if arrivals continue to increase further, said Ashok Walunj, director of Vashi APMC.

In other spot mandis also, onion prices have declined. In Pimpalgaon of Maharashtra, the commodity is trading at Rs 2,100 per quintal from Rs 2,975 per quintal in the beginning of the month. Onion supply to the market has improved from 565 tonnes in the first week of January to around 1,000 tonnes now.

Similarly, in Manmad and Malegaon – the other two major producing centres – onion prices declined to Rs 2,200 per quintal from Rs 2,900 per quintal and Rs 3,200 per quintal respectively. The arrivals almost doubled in both markets to nearly 700 tonnes each.

According to the data compiled by Nashik-based National Horticultural Research & Development Foundation (NHRDF), onion prices in Bangaluru, fell to Rs 3,000 per quintal from Rs 3,300 per quintal. Although the supply in Bangaluru markets declined to 950 tonnes from nearly 1,950 tonnes more than a fortnight ago, prices saw a decline because of all round price fall across the country. Owing to unseasonal rainfalls during the harvesting season in South India, onion output is estimated to decline by around half in this region. Subsequently, supply to spot mandis from local farm houses is likely to decline further. But, traders believe, supply from Pune that would start early next month, will bridge the supply-demand gap in southern markets. Onion had surged to Rs 60 per kg in the beginning of this year. But, following government intervention – raids on hoarders and government agencies selling cheap – brought down the prices. The government will continue with these measures to bring down prices at a reasonable range — between Rs 13-15 per kg, said Virendra Singh, chairman of National Cooperative Consumers’ Federation of India Limited (NCCF), the apex federation of consumer cooperatives in the country.

NHRDF data said onion prices fell from Rs 4,500 per quintal to Rs 3,500 per quintal in Kolkata and Rs 4,500 per quintal to Rs 4,000 per quintal in Chennai. In Delhi, the commodity plunged to Rs 2,400 per quintal, from Rs 3,700 per quintal in the beginning of January.

Meanwhile...

http://www.thehindubusinessline.com/bus ... 171891.htm

Suspend onion imports by another 10 days: NCCF

Warning that a massive influx of onions from Pakistan and China is creating “panic” among farmers, cooperative major NCCF today asked the government to suspend imports of the vegetable for 10 days, by which time the rates are expected to cool down.

“Recent import of onions from China and Pakistan has created panic among our farmers and many of them have started harvesting the crop prematurely so that they do not incur losses,” National Cooperative Consumers Federation of India Ltd (NCCF) Chairman M r Virendra Singh told reporters.

“Onions landing at Mumbai last week from China are big in size, each weighing about half-a-kg. It’s full of water and not pungent,” he added.

“Pakistani onions, I have not seen personally,” he said, adding, “In any case, Indian onions are far superior to them.”

“We received reports that many onion farmers in Gujarat and Maharashtra have started plucking their crops prematurely due to this,” he claimed.

Accompanied by NCCF Managing Director Mr M K Khan, Mr Singh claimed the onion imports have in fact delayed amelioration of the domestic situation by almost a week.

Mr Singh said the situation has started improving and claimed the price of onions will come down to the comfortable level of Rs 25—28 a kg in retail markets of the country in the next 10 to 15 days.

Ambar · Post by **Ambar** » 18 Jan 2011 07:17

Where were these farmers when the regular joe on the street was/is struggling to buy a kilo of vegetables for his family? We hate big American retailers entering India because we think it'll drive those thieving small store owners out of business, now we want to ban import of onions even though it is up 400% from its regular to protect farmers! So who really thinks about the 'aam janata' ?

habal · Post by **habal** » 18 Jan 2011 09:33

What one can infer from Pawar's actions is he will resort to 'imports' immidiately if say price of 'rubber' shoots up in the market.

But he will sit tight and do some mumble jumble from his semi-paralysed mouth should price of onion, sugar or lately 'garlic' shoot up and up. He should have been kicked out of the cabinet long ago if these fellows had any ounce of integrity. Now, the only option remains to include his name in the upcoming wikileaks list.

suryag · Post by **suryag** » 18 Jan 2011 09:43

How to curb corruption? Scrap Rs 500/1,000 notes!

Very good suggestion IMO

Akshut · Post by **Akshut** » 18 Jan 2011 21:36

Something different to what we hear from these types of regular reports.

http://economictimes.indiatimes.com/new ... 313455.cms

Goldman Sachs warns against investing in India, China

According to the report, India is an even bigger worry, with yawning twin deficits, and overheating visible on all fronts. The nation's central bank warned this week of "surging inflation".

"India's current account deficit is running at a record pace of 4.1 percent of GDP and it is 100 percent funded by short-term portfolio flows, which cannot be relied on indefinitely," said Moe, describing Mumbai's bourse as "crowded".

Goldman expects China to rebound strongly in the second half of the year, distancing itself from the ultra-bearish views of those such as hedge fund star Jim Chanos betting that Beijing will prove unable to engineer a soft landing from its property bubble.

The surprise for 2011 will be a torrid recovery in the US, with growth of 3.4 percent to 3.8 percent, as the country confounds critics and averts a post-bubble "Lost Decade". Even Japan will outshine China, pulling out of its deflation trap, with earnings growth of 23 percent this year and 22 percent in 2012.

Kathy Matsui, Goldman's Tokyo strategist, said Japanese equities may be the best way to play the Pacific growth story since the average price-to-book ratio is 1.0, compared to 1.9 for China and the rest of emerging Asia.

arjunm · Post by **arjunm** » 18 Jan 2011 21:59

18 Jan, 2011, 08.19PM IST,IANS
Goldman Sachs warns against investing in India, China

London . Goldman Sachs , the US investment banking giant, has issued a short-term alert over investing in India and China due to the impact of rising inflation, advising clients to rotate into Wall Street and other bourses as a safer bet over coming months, a media report said on Tuesday.

http://economictimes.indiatimes.com/new ... ting-in-in

arjunm · Post by **arjunm** » 18 Jan 2011 22:09

Sorry looks like we saw the news at the same time.

Here is China leads in exporting flight of Capitals NO: UNO-2.18 TR, India 5th in Asia, Globally 15th.

Asia accounted for 44.4 percent of total illicit flows from the developing world followed by the Middle East and North Africa (17.9 percent), developing Europe (17.8 percent), Western Hemisphere (15.4 percent), and Africa (4.5 percent).

According to the magnitude of outflows the countries were ranked as: 1. China $2.18 trillion; 2. Russia $427 billion; 3. Mexico $416 billon; 4. Saudi Arabia $302 billion; 5. Malaysia $291 billion; 6. United Arab Emirates (UAE) $276 billion; 7. Kuwait $242 billion; 8. Venezuela $157 billion; 9. Qatar $138 billion and 10. Nigeria $130 billion.

http://www.dailypioneer.com/311528/Indi ... study.html

abhishek_sharma · Post by **abhishek_sharma** » 19 Jan 2011 12:11

Cabinet to consider 51 p.c. FDI in multi-brand retail

http://www.hindu.com/2011/01/19/stories ... 640100.htm

joshvajohn · Post by **joshvajohn** » 19 Jan 2011 19:21

Black money info can't be made public: PM
http://timesofindia.indiatimes.com/indi ... 320434.cms

Government under MMS is party to keeping secrets of Black Money.

Honble PM MMS has lost credibility altogether!

Many COngress and other party leaders will have to resign when this black money goes to public.

I do not find difference between those who work against our country including terror money transactions and also those who try to hide these secrecies.

Some of these politicians money is being donated to Terror groups. are they trying to hide!!!

Abhijeet · Post by **Abhijeet** » 19 Jan 2011 21:57

abhishek_sharma wrote:Cabinet to consider 51 p.c. FDI in multi-brand retail

http://www.hindu.com/2011/01/19/stories ... 640100.htm

All is lost. The country is being sold out to evil foreigners again.

We need to protect our inefficient small retailers at any price!

ramana · Post by **ramana** » 19 Jan 2011 23:10

The recent onion shortage and subsequent price rise and the glut later on is due to the "bull whip effect" that ignores the commodities in the pipeline. Let me clarify. A graph of the commodity of interest with time will show a steady parallel line to the x-axis. And then a sudden spike due to (demand for whatever reasons) and then a series of osccilations and then settles back to normal. This looks like a cracking a bull whip in cowboy parlance.

Wiki LinK:

http://en.wikipedia.org/wiki/Bullwhip_effect

Theo_Fidel · Post by **Theo_Fidel** » 20 Jan 2011 00:22

The "bull Whip" works for systems that are closely coupled between production and consumption. India is not yet closely coupled like that.

I was talking to my dad about why this recurring inflation is occurring right now, esp. everywhere at the same time and he said it is because of all the expressways we are building. It is a sign of improved infrastructure. At one time, 20-30 years ago, most states ate the vegetables they produced. Rarely did the crop move more than 200-300 km. So while Delhi might have a shortage the rest of India would not feel it. Now most crops have become increasingly concentrated in small specialized areas. From where they are shipped all over the country.

I went looking for evidence on the Dept. of Ag site.
http://dacnet.nic.in/eands/At_Glance_2009.htm

Onion - 70%+ of the crop comes from a small area spreading from Maharashtra, Karnataka & Gujarat.
Tomato - 60%+ comes from Karnataka, Andhra and Odisha
Potato - 70%+ comes from UP & West Bengal
Coconut - 70%+ comes from TN & Kerala

So if you live in a city in India and buy any of these vegetables, almost certainly this is the place it comes from. Now, over time this trend is increasing as local production can't keep up with the enormous yields these specialized regions are getting. So locals get beaten out of the market as transport costs have fallen dramatically after deregulation. Yes, 20 years ago truck was also licensed with the government setting freight charges , number of trucks, etc. With the new expressways it often takes less time for a Onion to go from Pune to Chennai than it would to get from say Nagapattinam. Often under a day!

apparently.

The problem is that the farmer in Pune has no idea what/when the demand for Onion is going to be in Delhi. So he plants and harvests to his own schedule. With the result that all of our Onion crop Yo-Yo's from shortage to bumper crop depending on that one region as the farmers plant and harvest together.

The other problem is that when there is a shortage in Delhi, the Onion immediately starts getting shipped there as prices rise. So even though Pune has plenty available for Mumbai, Mumbai too immediately starts seeing the same inflationary spike. This trend is going to increase with time. Cold storage's can't really help as they can only stretch out the fag end of the cycle. Or problem appears to be with the front end.

This where a futures market in vegetables would be very useful. But Nooo, we had to go and shut that sucker down remember. Drat those speculators....

svinayak · Post by **svinayak** » 20 Jan 2011 02:13

Theo_Fidel wrote:The "bull Whip" works for systems that are closely coupled between production and consumption. India is not yet closely coupled like that.

I was talking to my dad about why this recurring inflation is occurring right now, esp. everywhere at the same time and he said it is because of all the expressways we are building. It is a sign of improved infrastructure. At one time, 20-30 years ago, most states ate the vegetables they produced. Rarely did the crop move more than 200-300 km. So while Delhi might have a shortage the rest of India would not feel it. Now most crops have become increasingly concentrated in small specialized areas. From where they are shipped all over the country.

I went looking for evidence on the Dept. of Ag site.

My friend who is in commodity trade in Chennai said he could have imported onions from chennai but he does not have the distribution system. Many traders could have reduced the shortage very soon and brought the prices and supply under control. But since 80% of the supply is still controlled by the govt there is some inertia.

Indian distribution system needs a nationalistic attitude and the commodity trading also needs a nationalistic attitude where Indian consumers are protected from the foreign producers and suppliers. This common market has not been encouraged by the GOI. PRC makes sure that its country always benefits.

SwamyG · Post by **SwamyG** » 20 Jan 2011 02:52

Theo_Fidel wrote:I was talking to my dad about why this recurring inflation is occurring right now, esp. everywhere at the same time and he said it is because of all the expressways we are building. It is a sign of improved infrastructure. At one time, 20-30 years ago, most states ate the vegetables they produced. Rarely did the crop move more than 200-300 km. So while Delhi might have a shortage the rest of India would not feel it. Now most crops have become increasingly concentrated in small specialized areas. From where they are shipped all over the country.

I have often posted against being taken over by "organized" sector - be it farming, retail or ityadi. It is the nature of the beast.

http://forums.bharat-rakshak.com/viewto ... 94#p976794

It is not that the unorganized sector are entirely altruistic and won't ditch, it is just that they cannot. And because of being unorganized and not in a chain model; their impact one each other is unlike the impact of say a chain store shutting down its shops or pulling a particular product from its stores.

http://forums.bharat-rakshak.com/viewto ... 64#p916364 {this particular post has several links - hey Suraj liked it

}

Suraj: Chain stores is one manifestation of retail sector. Unorganized sector, or mom-n-pop stores by nature are not chain stores. The chain stores are dependent on the parent company (even if one were to take into account the franchising). They will pass both the goods and bads. There are efficiency benefits, which nobody can deny. Their financing needs and modes are different,over a period of time Conglomerates & cartels form. The organized sector rapidly can become part of a local, regional, national and international network. Having a mom-n-pop stores helps us keep the balance, the society will not place all eggs in one basket (organized or unorganized). The society will not be at the mercy of the "big guys" alone.

http://forums.bharat-rakshak.com/viewto ... 09#p916309 {contains a link written by Prof. R.Vaidyanathan}

I have said in this dhaaga several times on India achieving a balance between organized and unorganized sectors. The unorganized sector can be used to hedge against the organized sector. The unorganized way of doing business can stop dominoes effects and act as a cushion when the organized sector, which is globalized and sometimes in the hands of foreigners, takes a hit. The debate should not be if we need one or the other, it should be about how we effectively use both to society's advantage.

http://forums.bharat-rakshak.com/viewto ... 82#p612282

The mom-pop does not have the efficiencies of the big-retail, and neither it is able to transfer it to each other. But in the same way, the mom-pop stores can also keep each other insulated from any negative cycles within the industry. I think a country, especially, India needs to have the right mixture of big-retail and mom-pop stores. Neither one is enough. We need the organized and unorganized in all sectors.

Aping East or West is bad; but selective adoption based on our circumstances and lessons learned from mistakes (both my others and self) are necessary.

We, humans, have made the society very complex; and have to pay the price for it. There is no free lunch for ordinary folks, just for some governments and companies.

SwamyG · Post by **SwamyG** » 20 Jan 2011 02:58

Abhijeet wrote:
abhishek_sharma wrote:Cabinet to consider 51 p.c. FDI in multi-brand retail

http://www.hindu.com/2011/01/19/stories ... 640100.htm
All is lost. The country is being sold out to evil foreigners again.

We need to protect our inefficient small retailers at any price!

Yuppeeee.....let the people be damned. Let us protect our efficient companies and big retailers ....oops I almost forgot corrupt government at any price.

ramana · Post by **ramana** » 20 Jan 2011 03:04

Pioneer article by Swapan Dasgupta....

India doesn’t know its onions

January 20, 2011 3:03:24 AM

Swapan Dasgupta

There was a time, not all that long ago, when it was obligatory for all the London correspondents of Indian newspapers to write potted accounts of each report on India in the mainstream newspapers. Those were the days the country was either in need of testimonials or in constant search of ‘imperialist conspiracies’ to undermine India. Since testimonials were few and far between — how many times could the Fleet Street hack in the tropics write about Mother Teresa, the Ambassador car and the enduring charms of a long railway journey? — the focus was on detecting which newspaper was more ‘anti-India’ than the other. It was a silly game India House encouraged and the babus and Ministers in Shastri Bhavan lapped up enthusiastically.

Things have changed. The internet has made the ‘Report of Foreign Newspapers on India’ quite redundant. But more to the point, there are few negative stories these days. Most visiting or resident Brits are so awe-struck by India’s new prosperity and so depressed by the corresponding decline of the old ‘mother country’ that they gloss over apparent shortcomings. Also, there is always a fear that a judgmental report on venal and crazy natives may attract the displeasure of the professional multi-culturalists. In any case, when it comes to criticism by foreigners, Indians tend to be remarkably thin skinned. These days, with the swagger of new-found prosperity, Indians also tend to respond to even the mildest criticisms with insufferable conceit and arrogance.

This may be the reason that a suggestion I made on Twitter to read Boris Johnson’s “Let’s show booming India that we know our onions” (The Daily Telegraph, January 10) drew many snide comments. I find the Mayor of London a complete scream and wish that all politicians could be like him. But I do admit that Boris’ humour is also, like British institutional food, an acquired taste — for a sample, see his speech on the origins of ping-pong on YouTube and note particularly the bewilderment of Gordon Brown.

Yet Boris was not being willfully funny when he drew attention to something very curious he found during his short break in Mumbai last week: That onions in Indian cities cost more than they do at the local Tesco supermarkets in London. In London, onions are the equivalent of Rs 45; last week they were selling for anything between Rs 60 and Rs 70 in urban India.

Boris’s characteristic suggestion to the problem was to export British onions to India. This may be taken with large helping of Tata-produced salt but there is some merit in viewing the absurd levels of food inflation in India with a generous measure of black humour.

I refer in particular to the Government’s short-term measures to check the soaring prices. Apart from the legitimate strategy of importing truckloads of onions from across the Radcliffe Line, these include selling onions at Rs 35 through Government-run Kendriya Bhandars and getting NAFED to sell onions through mobile vans. Other measures include ‘strict’ vigilance at wholesale markets and even income tax raids on errant ‘hoarders and black marketers’.

Forgive me for nurturing an enormous sense of déjà vu. Throughout the early-1970s when Indira Gandhi’s garibi hatao collapsed under the rubble of socialist mismanagement, it was routine for All India Radio to provide details of ‘stringent action’ against ‘hoarders and black marketers’, many of whom were arrested under MISA (the precursor to TADA). Some of the more populist Chief Ministers even had a few of these ‘hoarders and black marketers’ paraded through the streets with ropes tied around their waists.

There are template solutions to problems that have withstood the transition from the licence-permit raj to the free market. In the 1970s too, ‘essential items’ were to be sold at ‘fair prices’ from Government-run outlets. To prevent hoarding and ‘profiteering’, shops were instructed to prominently display their stocks of ‘essential items’ on huge blackboards. Hapless retailers spent a lot of energy trying to keep the stock taking exercise as up-to-date as possible; lots of money was also spent greasing the palms of inspectors who conducted spot checks.

Then there were the so-called Government-run outlets that would bypass the greedy lala. This was the brainchild of Indira Gandhi and her advisers after the 1966 devaluation that sent prices sky-rocketing. In an attempt to lessen consumer hardship, she decided to establish a huge Super Bazar at the point where Shankar Market met Connaught Circus. It was India’s first socialist department store — before Independence the gigantic Army & Navy and Hall & Anderson were landmarks in Calcutta and Bombay — and I remember it as the place where bills were always made in triplicate.

The whole exercise was conceptually flawed. It was based on the principle: What I don’t see is not my problem. The idea that one mega-Super Bazar (and some extension counters) in Delhi and perhaps a few metros would be enough to dampen prices was absurd, if not laughable. But these are precisely the absurdities of trying to superimpose state structures on a market mechanism.

For too long, inefficient and leaky institutions such as NAFED have been entrusted the responsibility for agricultural trade. The statist approach just doesn’t work. It is time to allow the free market to come into play in agricultural trade. Only then can we buy onions at a rate cheaper than what prevails in British supermarkets. India must discard the old, socialist templates.

Also onion price rise could have been a Pawar stroke to UPA to not disturb his fief? Since such rise had de-thorned the Janata Govt earlier. And now MMS might have used it to allow 51%FDI in the retail sector ?

SwamyG · Post by **SwamyG** » 20 Jan 2011 04:05

The Thermodynamics of Local Foods
A simple essay written in 2009.

The first law of thermodynamics is that matter and energy are never created nor destroyed, they only change form. The forms of matter and energy in the human body come from food, which primarily comes from soils. When plants and fungi occupy soil and grow, they ingest atoms in simple or mineralized forms and incorporate them into organic forms. This process essentially mines soils at an atomic scale.

The concentration of people into urban centers requires shipment of food far away from agricultural lands. Soils, therefore, are constantly depleted of nutrients. Currently, these nutrients are replaced by adding soil amendments and fertilizers that themselves derive from mining operations. In the same way that oil fields deplete, so do the mines that support current agricultural practices, whether based on man-made chemicals or imported organics, such as bat guano from Chile. In essence, the food system is predominantly a linear chain from mine to soil to food to plate to bodies and excretions to the treatment plants to the water ways and land fills and to the oceans.

Because we can’t create matter out of thin air to replace these depleting resources (First Law) the system is unsustainable. To make it potentially sustainable we’d have to take the waste outputs and make them inputs again to yield a cyclical food system.

Transportation Constraints

A sustainable system must be primarily local because of energetic and logistical constraints. What is removed from a plot of land needs to be returned. Okay, not the exact atoms, but roughly the same kinds atoms in the original quantities and proportions.

In BRF I have used couple of times the term "Dharmic Economic Model" as Dharma is that which sustains. Nothing to do with religion. All to do with Rtu and nature.

Theo_Fidel · Post by **Theo_Fidel** » 20 Jan 2011 04:17

SwamyG,

I think you misunderstood what I said.

This not a question of good transport and organized retail causing problems.

The problem is that agriculture has consolidated and organized more than retail has. There is no feed back from retail to production. If any thing mom&pop store aggravate this onion problem. Right now the wholesale price of onion is Rs30-40 at Koyambedu,Chennai yet the mom&pops are still selling at Rs60+ at retail. So next time you buy an onion think about that. Half of what you pay goes straight to the Tharkari wallah in front of you!

svinayak · Post by **svinayak** » 20 Jan 2011 05:39

http://www.bloomberg.com/news/2011-01-1 ... pment.html

Donald Trump’s son said in a July 2008 interview he planned to set up a fund of as much as $1 billion to buy property in India. “The market place is beginning to understand and appreciate luxury, so there is a great opening for us there, as well as in resorts,” he said at the time.

Trump is hoping to take advantage of growing demand for luxury properties in a market with an increasing number of millionaires. India’s wealthy may almost double their assets to $6.4 trillion over the next five years as economic growth swells their ranks, Credit Suisse Group AG said in its global wealth report released Oct. 8.

That has fanned demand for residences and homes designed by top designers such as Versace, Gucci and Roberto Cavalli among the well-heeled in major cities, said Mumbai-based Anand Narayanan, India director of Knight Frank LLP, a London-based real-estate broker.

‘Next Big Trend’

“The next big trend in India is that of branded residences such as the Trump Towers and Versace Residences we see in other cities,” said Narayanan.

The billionaire has branded buildings from skyscrapers in Manhattan to condominiums in Tijuana, Mexico, Trump World in the South Korean capital Seoul and the Trump Towers Istanbul.

The Trump development is being built on the site of a former hospital in south Mumbai, in a neighborhood dotted with jewelry stores, the only Porsche showroom in the city and next to a Mercedes showroom, said two people familiar with the matter, who declined to be identified before an official announcement.

“Our entry has to be in Mumbai and that’s where everything is going on right now in terms of the high-end real estate,” the younger Trump said in 2008. “That’s the place where one is going to achieve the highest prices per square foot. It sets the tone for all of the other future developments.”

Gus · Post by **Gus** » 20 Jan 2011 05:45

My understanding of a bull whip effect is - it becomes amplified with longer lead times. Prescription, at least in industrial setting is to reduce lead times.

Hari Seldon · Post by **Hari Seldon** » 20 Jan 2011 05:47

So India is indeed a single mkt in farm produce, seems like. I was under the impression that grain transfers across state and even district boundaries were governed by brit-era laws and all that. Besides, the local mandi monopoly continues to stay, AFAIK. ITC recently had to stop expansion of its e-choupal model owing to regulatory changes.

Ambar · Post by **Ambar** » 20 Jan 2011 07:28

Theo_Fidel wrote:The "bull Whip" works for systems that are closely coupled between production and consumption. India is not yet closely coupled like that.

I was talking to my dad about why this recurring inflation is occurring right now, ....

Theo,

I am not sure what expressways we are talking about here, but as someone who comes from a family of farmers and owners of a small trucking company, i can vouch that the infrastructure in Karnataka, Kerala and many other Indian states are much worse than what it was 10-12 years ago. 2 of our busiest highways NH-48 and NH-17 are shutdown 6-8 months in an year due to poor condition forcing truckers to take longer,narrower and poorly maintained state highways.

Transportation costs have fallen? How? 12 ton truckload of goods from KA to mid-MH had a fixed price of 5-6K in 1995, it costs 4 times that amount now. If better infrastructure is to blame for food inflation, why are countries like Pakistan with little or no investment in infra upgrades reeling under food inflation?

India's problems in agri sector is age old. Antiquated farming methods,over-reliance on monsoon,reluctance to mixed farming to name a few. The government agencies are no better. Walk into one of the many district level agriculture/horticulture office to get the soil/water analyzed in their labs and you'll know what i'm talking about. We have structural problems that are getting worse every year.When the price of rice increased 4 folds in 2007, the government banned all exports,but the price has remained the same.I'm afraid the same will be repeated with vegetables as well.In an effort to appease the farmers we'll once again lead the common man to guillotine.

SwamyG · Post by **SwamyG** » 20 Jan 2011 07:48

Theo saar: ayyo naan ungale onnum solale (I did not comment on you). I just used your post to push my pet theories

Ambuttu dhaen. Be it electrical, communication, road, water, sewage, information itydadi networks - I believe all networks should have redundancies built in; on top of it there should be a level of smaller networks that should be hooked to the larger network. When a sub network fails, then we should be able to quarantine the negative impact to just that network, keeping the others running with as less impact as possible.

For the safety, stability or security of people, it makes sense to have buffer or some kind of isolation. The challenge is to integrate to gain efficiency but at the same time build gates or buffer zones.

Incidentally, the World has evolved to depend on 3 grasses - Rice, Wheat and Corn are part of the staple diet across the planet. Say rice or wheat gets hit by some pests or some kind of disease that travels faster then we are in deep poo.

Local farmers, stores or businesses are no doubt less productive and not as efficient; but they have their role in the stability.

SwamyG · Post by **SwamyG** » 20 Jan 2011 07:54

Ambar wrote:In an effort to appease the farmers we'll once again lead the common man to guillotine.

If agriculture provides livelihood to nearly 60% of Indian's population, how common can you get than that? How are farmers and common man different?

India no doubt has problems, but you seem to have dismissed all the progress we have made in the food production.

vina · Post by **vina** » 20 Jan 2011 09:50

Theo_Fidel wrote: Right now the wholesale price of onion is Rs30-40 at Koyambedu,Chennai yet the mom&pops are still selling at Rs60+ at retail. So next time you buy an onion think about that. Half of what you pay goes straight to the Tharkari wallah in front of you!

Err. It is the old story. The supply chain and retailing (based on MRP) is so inefficient, riddled with leakages, corruption, and vested interests that put huge barriers to real competition (it is amazing, but in retail in India, you have NO price based competition!), the amount of mark up is incredible.

Now that I am a business owner, I get to shop in Metro Cash &Carry and the difference between the retail and Metro price is simply amazing !

For eg, something like a diapers of a leading brand.. MRP is something like 775 or so for a large pack. I get it in Metro at Rs 556 or so! Just imagine the margin the retailer gets when you buy it from a local mom & pop store or a retail pharmacy at MRP. My experience has been that there is very little items, where the margin from metro to retail is less than 25% (unless is a direct sales model like a Dell computer where it is competitive). And no Metro doesn't make me buy a dozen packs and the Metro price includes metro's mark up and taxes (which definitely get paid), unlike a kirana shop where it doesn't.

For all those claim that the current local mom & pop system is good , well, it aint so. You are getting ripped off. And of course the margins are HIGHEST in food and veggies. Ever wonder why everyone from Walmart to even now pharmacies like Duane Reade want to stock on groceries and Veggies in the US? And then the commies come on the street making noise against food inflation and harking back to a "crack down on hoarders/black marketeers" kind of broken vinyl record. No wonder you have such huge inflation and price swings and the bulk of the wallet share going to middlemen and commission agents and not to actual producers or true value creators like supply chain folks.

Oh yeah, the commission agents/mandis with technology and supply chain systems harking back to the time of the Pyramids have massive waste and shrinkage and handling costs and inefficiencies.

I just hope that MMS /Kangress takes this inflation exercise and blows the retail trade open to full competition. Why should just a privileged few get the benefit of buying in Metro style shops. Why not the entire population in Metros/Carrefours/Walmarts and of course Reliance and other Indian competitors? Choice is always good!

Theo_Fidel · Post by **Theo_Fidel** » 20 Jan 2011 11:57

Ambar,

You may have missed the point. It is easier to transport stuff from Pune to Chennai on the highways than it is to transport from a small local town to Chennai on country roads which as you point out are broken down. The shipping costs are compared to the value of the cargo being transport.

To do the math -
a long term contract truck can do a 16 ton onion run from Pune for about Rs 20,000 - Rs 24,000. Onions sell for about Rs30 a kilo so a 16 ton load is worth ~ 5 lakhs! So the marginal cost increase is only 5%. So the onions will now cost Rs 31.50. You see where I'm going with this.

As far as agriculture I don't know where you farm but I've said this before 2/3's of farmers in India are on marginal lands. This land should not be cultivated yet it is because they don't know what else to do. This is the number one cause of impoverishment. As far as your complaints about bad farming I agree they exist but largely amongst those marginal farmers I mentioned earlier. Most plantations around me inter-crop. Even in Tirunelveli the coconut plantations inter-crop with Tapioca, sweet potato, some varieties of sapota, and on the older farms banana. I intercrop my coconuts with pineapples. Most farmers in established year round crop areas run their farms like a well oiled machine. If you go down to Tenkasi some time or the banks of the Tamirabarani you will see perfectly planted paddy, coconut, mango, etc plantings. Let me tell you it is not easy to get it looking like that. It takes hour upon hour of toiling in the hot sun. I wouldn't dismiss agriculture so easily.

Keep in mind Kerala is a whole different animal. I wouldn't base my idea of Indian agriculture on SRK. I have panned their approach before and I'll continue to pan it.

Do you know that the yield of rice on the better farms in TN approach 6 Tonnes per acre. This is world class. As a farmer all I see is way over production then price crash and losses. I've also said this before don't blame the farmer for these shortages. You tell us how much you need and we can deliver.

As far as horticultural offices some are only fit for dynamite, though the one near Pechiparai is pretty good. They have always tested the samples I've sent them though I have a couple of contacts there so they have done a couple for me in 2 weeks with a printed report and everything. I try to stay away cos they keep trying to push oil palms on me. Apparently my land is perfect for it, though I think they have quota's to meet as well. They do provide me all the pineapple seedlings I need.

SwamyG,

ennuk kobam onnum illai

(I'm not angry)

But I see your point about not depending on any one stream. Unfortunately a efficient supply chain must often maximize the potential from the best process available. Say you are a retailer in Chennai and you know you need onions in Jan 2012. You think you can charge Rs 35 per kilo. If you can buy a contract from a farmer in Pune to supply you onions at Rs25 a kilo I can guarantee you that the farmer will find a way to protect his crop and get it to you well in time. He can go get get the equipment for a covered plastic greenhouse, maybe hydroponics, get drip irrigation in there and triple yields. This is how much of the world does it. This is what would really drop prices. I think this too is coming to India. At which point those marginal farmers in open fields will just get crushed.

Check out the commodities trade.

http://www.ncdex.com/CommodityQuotes/co ... watch.aspx

But we don't even have a futures market for onion. Instead of controlling short term speculation , the government shut the whole thing down. Futures Trading in Potato, the one vegetable that has not spiked recently, is permitted allowing farmers and retailers to hedge themselves.

Ambar · Post by **Ambar** » 20 Jan 2011 14:12

Theo,

The infrastructure has improved within major cities (not all of them), but the highway system in much of the country is in absolute shambles. L&T recently refused to bid on the repair work of NH48 because of a ridiculously low cap on tender and external pressure to hire only 'certain' local sub-contractors. NH 17 that connects much of India's west coast including some major strategic cities (Mumbai included) is in ruins on lengthy stretches. Mangalore to Panjim trip for trucks now takes more time and diesel than it did a decade ago thanks to poor maintenance of the road and increased traffic. I was appalled at the condition of highways outside major cities like Indore during my last trip to MP.

I agree that the margin for goods producers have increased thanks incidents like 400% spike in onion/tomato/rice prices, but this translates into no benefit for the end consumer.

If bad farming practices are by marginal land owners ,and if 2/3rds of farmers own marginal lands doesn't that mean 2/3rds of our farmers are employing antiquated farming methods? Bullocks and bare hands are still the norm to plough lands. I haven't seen a single harvesting machine,or large seeders down south . I have heard farmers in Punjab place millions of dollars worth orders for imported agricultural machines and probably that explains why they do so well compared to rest of India. Thats before we touch the topic of excessive water usage thanks to there being no-sprinkler/precision watering systems in most farms, our wells are going dry now.

If there is a excessive supply of rice as you state,why are we paying 40 Rs/kilo at the retailer compared to 12-15 Rs just 3 years ago is beyond me.

My family farms in coastal Karnataka, not too far from the KL border and the utter disregard and dis-functioning of the local agricultural board is to be seen to be believed. Infact,apart from the much adored KMF (Karnataka Milk Federation), most of the state government machinery in KA is not even worth a Paki.

Futures market is no guarantee that the prices will come down, if it goes the way oil futures trading has been then we can pretty much guarantee prices to never come down.

@Vinaji : Exactly my point! And if MRP on products has not wiped out all notions of competition already,small retailers rarely obey the marked price and always overcharge the customer. Heck! Even a bottle of coke is charged 2-4Rs extra for it being 'cold' (ever heard of a hot pepsi/coke?) at these so called "mom and pop" stores.Not to mention the unchecked adulteration of products ,esp unsealed food products.

Ambar · Post by **Ambar** » 20 Jan 2011 14:16

SwamyG wrote:
Ambar wrote:In an effort to appease the farmers we'll once again lead the common man to guillotine.
If agriculture provides livelihood to nearly 60% of Indian's population, how common can you get than that? How are farmers and common man different?

India no doubt has problems, but you seem to have dismissed all the progress we have made in the food production.

Farmers can atleast eat what they produce, an office goer or a blue-collared factory worker does not have that option.Farmers get subsidies,loans from nationalized banks that are rarely paid back,free electricity and a free license to go on a rampage when prices fall, what about the regular joe on the street?

I am sure we have made lots of progress in food production, sadly most end consumers see none when half of their paycheques goes to food alone.

vina · Post by **vina** » 20 Jan 2011 14:34

I haven't seen a single harvesting machine,or large seeders down south .

I don't know which part of "south" you are talking about, but even in dry parts of TN like Tiruvannamalia (en route to Pondicherri from Bangalore), I saw columns and columns of combine harvesters on the road, something which simply were not present even a decade ago.

Now with NREGA type wages kicking in and lack of farm hands, I am willing to bet that this particular species has multiplied many fold.

Outside of Kerala, the road network has simply improved amazingly. Definitely in TN it has changed beyond recognition. For eg, a couple of months ago, I was visiting Tirupati and then went on to Sri Kalahasti and on the way back to Chennai, my brother and I took the Sri Kalahasti-Sulurpet-Tada-Chennai route. It was unbelievable from the days I remembered as a kid. The road was near Autobahn quality, straight as an arrow, brilliantly surfaced a great joy to drive in. Naydupettah to Chennai was just 1hr 15 mins FLAT and from entering Chennai near West Anna Nagar, to San Thome/Adayar, took an extra 1 hr.

I remember, when I went to visit my uncle for the 2nd SLV-3 launch back in the early 80s. It was a rickety 6hr bus ride, from someplace near Mint/N Madras, driving past Red Hills/ Poondy lake .. a rest halt at some mosquito and flea infested rat trap in Tada for a "tea" and hellish heat and when I stepped off at Sriharikota (near my uncle's "quarters") my shoes sank in the melting tar on the road surface!

Now if you can do Nayudupettah - Chennai in 1 hr in air conditioned comfort, all peace and progress onree. Atleast for that I am glad we voted NDA into power. Kangress would simply have never built a road network in India for another 100 years if that sort of thing hadn't happened.

Ambar · Post by **Ambar** » 20 Jan 2011 15:02

The parts of south that i am familiar with i haven't seen any harvesters.Hopefully they'll become a common sight everywhere that'll reduce the dependency on manual labor and increase efficiency. After reading your post, i did a search for harvester manufacturers in India, here's an interesting link : http://www.dare.co.in/opportunities/agr ... vester.htm

The harvester sales has increased a mere 5% from 1994-2006 ( from around 405 to 427 / year), hopefully this number would have seen a multifold growth in the last 4 years.

As for the roads, TN has always had one of the best infrastructures in the country. Drives to Madras in 80s and 90s from Bangalore was always a joy, but enter KA and we would be back to reality.Try driving from central to western MP and you'll realize that highways are almost non-existent. We have a long long way to go before we have anything as efficient as autobahns or US interstate highway system.

Virupaksha · Post by **Virupaksha** » 20 Jan 2011 20:25

The mark up for any food item from farmer to end retailer be it walmart in US/mom and pop store in India always is atleast 150%.

Dont go by what the big stores say about "margins". These margins are given after excluding the costs of employee, rent etc.

Theo_Fidel · Post by **Theo_Fidel** » 20 Jan 2011 22:32

The crop tiger is very common in Tirunelveli and Kanyakumari area. Let me see if I can find a picture. Kinda small so you may not even notice it running around.

Ah! there you go.

It does about 1 acre an hour. A skilled operator can manage much more. It threshes and bags the grain. It costs about Rs2,200 per hour and is more or less competitive with a manual harvest. I used it 2 years ago and we started at 5AM and were done by 10 am. Grain was at the miller by 3 pm. This year there was enough labor for a manual harvest. But I might use it again next year.

These is a hopeless backlog if you want one though. Last I heard there is a 3 year wait list.

It doesn't take a lot of machines to harvest crop. Lets do the math.

Say you have 5000 of these machines running 16 hour days harvesting 20 acres per day on average. That would be 100,000 acres per day. In a 6 week harvest season, 42 days would get you about 4 million acres! If you crop twice a year you can get in 8 million acres. Roughly 40,000 of these machines could get India's entire rice harvest. In only 6 weeks. So there...Since it can also harvest wheat which matures later it could get that entire crop as well.

Around here the real problem is planting and weeding. Still manual and very expensive!

SwamyG · Post by **SwamyG** » 20 Jan 2011 23:02

vina wrote: For all those claim that the current local mom & pop system is good , well, it aint so. You are getting ripped off.

Humans being the humans, they will get greedy at times and definitely indulge in price gauging. I do not support mom&pop stores because they are good or that the big businesses are bad. It is the nature of things about these two "organisms". As a society we derive benefits from both organisms. Crying that one organism is evil and not extracting benefits from both is like missing the bus or driving a bus without brake towards a cliff.

vina wrote: And then the commies come on the street making noise against food inflation and harking back to a "crack down on hoarders/black marketeers" kind of broken vinyl record.

One only needs to drop the word "commies" as if that is good enough to make a point. Shades of McCarthyism is well and alive.

Theo Saar: I no doubt see the benefits of modernization and sundry stream lining of processes; and even helping organized sector gain more traction. From the stand point of a country, it is good if we have a balance between the two. The problems come when some one argues either of the system is the best or will solve all problems. When we solve problems, we introduce other problems that rear their head after years.

SwamyG · Post by **SwamyG** » 20 Jan 2011 23:15

Ambar wrote: Farmers can atleast eat what they produce, an office goer or a blue-collared factory worker does not have that option.Farmers get subsidies,loans from nationalized banks that are rarely paid back,free electricity and a free license to go on a rampage when prices fall, what about the regular joe on the street?

All people have problems. And all working people be it the farmer or the blue-collared factory worker contribute to the society. I objected because the way you differentiated between farmers and "common man". 60% of the population is in the agricultural sector.

A rice farmer cannot just eat rice alone

He is dependent on others. We are all in this together. It is easy to pick extreme examples and show how workers in a particular industry or sector or better off than others or cheat the system. My father in law, retired from SBI. He was in the credit/loans section. He talks about how people from the city and/or industrialists apply for loans and not repay them. Because of regulations or rules, the bank has to clear the applications faster......he worked in a section that was thanked less. Sometimes they have to bend to pressures from several quarters. So you see, I can cite real examples, like you, to show how city dwellers, office goers ityadi cheat the system. But it serves no purpose. We know humans cheat, and in India millions operate in the survival mode, and they will cheat (or beat) the system for survival. Let us not blame any one sector or set of workers. If the media reports are to be believed; 17,000 farmers committed suicide in 2009. An increase of 7%.

I do not know if it matters much, but I have no connection with any village or farmer. I am full and full city boy.

Bade · Post by **Bade** » 21 Jan 2011 01:00

Around here the real problem is planting and weeding. Still manual and very expensive!

While lazing around in front of the idiot box during my last visit, I did see a DD documentary in malayalam, of a planter being used in the vadakancheri block panchayat for paddy fields. It is almost like the the way they lay grass here in massa in long carpets. No bending over in knee deep muddy fields.

The mechanical contraption that plants that saplings seem to attach to a regular small tractor and needs a driver and two people at the rear.

ps: Pages 2,3 have images of what it looked like.
http://agricoop.nic.in/dacdivision/Mach ... chap2b.pdf

Prasad · Post by **Prasad** » 21 Jan 2011 03:29

This is what it comes down to - Mid day meals scheme doesn't have money to feed children a proper diet while the politicos can dole out free televisions. Our priorities are soo messed up that they're FUBAR !

http://timesofindia.indiatimes.com/city ... 322614.cms