Indian Economy: News and Discussion (Jan 1 2010)

vina · Post by **vina** » 23 Feb 2011 12:44

somnath wrote:Vinaji, I am confused...are you saying that growth in labour productivity can never outpace growth in wages (read, growth in investments)?

Nope. That is not what I said. I am just contesting that core assertion of PP that growth in productivity in the long term, especially if it is faster than investment will lower overall demand for labor/ create unemployment/lower labor participation rates/whatever. That flies in the face of the smell test and empirical facts. In fact if there is such huge productivity surge, there will be such a large surplus that whether consumed or saved & invested will raise overall aggregate demand in the economy , leading to overall higher employment in the long run and greater prosperity and all that "Universal Opulence" that capitalism promises with all it's bells and whistles.

Because in case productivity lags investment growth, it should also lag wage growth...Or are you saying that total factor productivity growth cannot outpace investment growth in the long run..Most frameworks, incl 101 Ricardian et al, and even on an intuitive "smell test" level, unless TFP growth keeps pace with investment growth, it is an unsustainable scenario...

Exactly, wage growth faster than productivity growth in the long run and leads directly to serious inflation and not sustainable. However, notice that productivity growth surge cannot happen in isolation without the 'surplus' going somewhere and will surely result in higher investment growth as well. Now in the long run, such surges always will revert to the mean in terms of trend line, even for productivity growth and such high consistent productivity surge above everything on the level that employment and labor participation is hit happens only in Nirvana when everything is so ultra efficient that the economy is able to provide "Universal Opulence" and everyone can just sit back and enjoy anything with minimal or no effort (that would include cleaning my kid's poo as if by magic.. that brat did it that morning and in Nirvana world, a robot that cost me next to nothing immediately leapt in and removed the soiled diaper, wiped the bottom and put in fresh diaper in the twink of an eye and soothed the bawling brat! Sigh.. that means I didn't have to expend any labor cleaning the kid up or employing a maid to do it). Nice thought, but we are not going to get there anytime soon, unless the UFOs land and dislodge some super Klingons who can do it.

somnath · Post by **somnath** » 23 Feb 2011 14:30

Vina-ji,

dont think PP is making a "long term" generic statement - only a business cyclical one on a specific context (India)..In the long run, Total Factor Productivity growth will match growth in general with full employment - classical theory, right? But as Lord Keynes said, in the long run, we are all dead! And there are "better" economists (than PP) who say the same thing, Diamond Mortensson Pissarides for example - they won the 2010 Nobel! It is quite possible that what we are seeing in India right now is a growth in labour productivity that outstrips growth in investment..doesnt mean that it will continue ad inifnitum..

Arjun-ji, there are lots of references to the (inefficient) use of capital by China - a simple google search should enable that..you can read up YAsheng Huang - he is a long time researcher on the topic...ICOR is one benchmark...Return on capital employed is another..aggregate leverage on balance sheets is a third..Banking sector asset quality is a fourth...There are many more - and you can find literally tons of data on all of them in www...In most counts, India would trump China (as also on energy efficiency)...

RoyG · Post by **RoyG** » 23 Feb 2011 19:39

Challenges of 1991 are back: Yashwant Sinha

http://www.ndtv.com/video/player/ndtv-s ... /191793?hp

rajkumar · Post by **rajkumar** » 23 Feb 2011 21:21

RoyG wrote:Challenges of 1991 are back: Yashwant Sinha

http://www.ndtv.com/video/player/ndtv-s ... /191793?hp

Very good interview. Please have a look. If his advice is not followed then we will have problems.

jagga · Post by **jagga** » 23 Feb 2011 22:04

Citi Report:India seen as world's largest economy

In view of its continuing robust growth, India is expected to be the world's largest economy by 2050, surpassing China and the US, a Citi report said."China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050," financial services group Citi said the report.The estimates are based on purchasing power parity (PPP), an economic growth indicator that takes into account the purchasing power of each country's currency,instead of the prevailing exchange rate conversion.Indian economy is expected to be nearly USD 85.97 trillion on PPP basis by 2050 from USD 3.92 trillion in 2010, Citi said.Going by the report, India would surpass the US – currently the world's largest economy – to become the second largest by 2040."We expect India to overtake Japan to become the third largest economy in the world by 2015," it noted.

Suraj · Post by **Suraj** » 23 Feb 2011 23:54

ramana wrote:So Prem,
2020 is arriving early!

Interesting thought I had earlier this morning: back in 2000-01 our GDP was ~$440 billion. Now the figure for 2010-11 is ~$1750B . In other words our economy has grown a Musharrafian 400% onlee over the decade

Virupaksha · Post by **Virupaksha** » 24 Feb 2011 00:21

RoyG wrote:Challenges of 1991 are back: Yashwant Sinha

http://www.ndtv.com/video/player/ndtv-s ... /191793?hp

That woman whoever she is, is officially the worst interviewer I have seen.

What's with her "mmm"s after every 3 words of Sinha.

Prem · Post by **Prem** » 24 Feb 2011 00:42

Suraj wrote:
ramana wrote:So Prem,
2020 is arriving early!
Interesting thought I had earlier this morning: back in 2000-01 our GDP was ~$440 billion. Now the figure for 2010-11 is ~$1750B . In other words our economy has grown a Musharrafian 400% onlee over the decade

All we need is replication of similar performance in this decade. Onlee then we can claim all is well!! Dec 16, 2022 will be the real V day for India and end of 75 year cycle of Indian destiny .

Theo_Fidel · Post by **Theo_Fidel** » 24 Feb 2011 00:43

Yashwant Sinha should not be listened to. His response when faced with crisis was to ship the gold to London not begin ANY reform measures. His words reek of dishonesty. Say anything about the country to vindicate himself.

In 1991

- Our total budget deficit was 13%+.
- There was no invisible's inflow.
- Our forex reserves were ~ $1 Billion.
- The current account deficit soared to 12% of GDP ($30 Billion) due to Saddam oil spike.

How can he possibly see the same thing now. What a snake.

WRT GDP the key date for me is still 2025.

That is when our nominal GDP will hit $10 Trillion.

Between now and then the Indian economy will save and invest roughly $40 Trillion, though much of it will be back loaded. Our GFCF will grow from ~ $5 Trillion at present to about $50 Trillion in 2025.

SwamyG · Post by **SwamyG** » 24 Feb 2011 00:57

Theo_Fidel wrote:Yes, government is venal and corrupt but it has also kept the peace and ensured a small measure of fairness so ALL entrepreneurs can try to progress. Most of India's growth is not from the truly big players. Even INFy types are only marginally responsible for growth. Most of India's growth has come from very small players, often 100 employees or less.

http://www.huffingtonpost.com/randall-k ... 25105.html

"If you look at the economic pyramid of a developing country, like the U.S.," I tell them, "at least 50 percent of jobs and GDP come from small businesses."

Small businesses are essential because they create jobs, generate income and take a stake in the communities in which they operate. They also generate goods and services for local communities. When led by the right kind of managers, they grow -- and create more jobs, more services and more wealth. And increasingly more often, they tackle social and environmental issues as well.

Take, for example, Servals Automation Private Limited in Chennai, India. Servals' flagship product is a Venus kerosene burner, which reduces kerosene consumption by 30 percent due to an innovative design that uses a single part in place of multiple tubes. Use of the stove reduces harmful emissions and saves the end consumer money. But that's not all. Servals has also taken the next step to "de-engineer" the production process -- breaking it up into a series of small pieces. They then created a manufacturing base in a village 50 miles from Chennai and worked with local self-help groups to train rural women to make the components. The women earn income, without having to leave their families and travel to the city.

vina · Post by **vina** » 24 Feb 2011 05:02

rajkumar wrote:
RoyG wrote:Challenges of 1991 are back: Yashwant Sinha

http://www.ndtv.com/video/player/ndtv-s ... /191793?hp
Very good interview. Please have a look. If his advice is not followed then we will have problems.

Sorry. The moment I hear Yeshwant Sinha and his record when he was Phynance Minister, I simply turn off. That guy is a bore and frankly a terrible record as a Finance Minister.

He was the RSS/Sangh Parivar's hand picked dude to push their economic agenda. Needless to say a total waste of time when he sat on that chair. Sorry, the RSS economic agenda reeks of a curious mix of extreme left couched in some rhetoric of autarky and is formulated and articulated by a bunch of luddites (Gurumurthy et al for instance).

That is essentially the problem with the RSS. What will appeal to folks like me is socially liberal and economically sensible (leaning slightly towards being conservative). What we have in the "Right" in India is socially regressive and revanchist and economically leftist/luddite. Very unappealing and hare brained.

ShauryaT · Post by **ShauryaT** » 24 Feb 2011 05:16

^^Vina: If you are done vomiting on Yashwant Sinha, can you actually list the type of things you did not like in his tenure as FM in the NDA government. Let us leave the fake Janta Dal government of Chandrashekar of 7 odd months out of the picture. People are talking of that tenure as if that government had any legitimacy.

YS hand picked by the RSS is a revelation?

ShauryaT · Post by **ShauryaT** » 24 Feb 2011 05:22

Theo_Fidel wrote:Yashwant Sinha should not be listened to. His response when faced with crisis was to ship the gold to London not begin ANY reform measures. His words reek of dishonesty. Say anything about the country to vindicate himself.

In 1991

- Our total budget deficit was 13%+.
- There was no invisible's inflow.
- Our forex reserves were ~ $1 Billion.
- The current account deficit soared to 12% of GDP ($30 Billion) due to Saddam oil spike.

Did you listen/watch the interview or are simply reacting to the title. If you did listen, can you actually take issue with his message?

Also, 1991

- He was FM of the fake Janta Dal Government for seven months! You expect a fake Janta Dal Governement of 50 odd MP's to usher in reforms!

svinayak · Post by **svinayak** » 24 Feb 2011 05:37

ShauryaT wrote:
YS hand picked by the RSS is a revelation?

This is a false flag and is a personal biased analysis. That cannot substitute for the real work done during that period.

somnath · Post by **somnath** » 24 Feb 2011 06:29

ShauryaT wrote:YS hand picked by the RSS is a revelation?

Oh, absolutely not, its hardly a revelation...It was public info that ABV wanted Jaswant Singh as the Finance Minister, but the RSS didnt trust him (too much of a "liberal"

)..BJP looked around and the only chap with a modicum of economic talent was this extremely immodest man with much to be modest about....Actually given that the alternatives were people like Dattopant Thengadi and Jagdish Shettigar, I guess they didnt have too much of a choice..Yashwant Sinha had managed to ingratiate himself with the Swadeshi Jagran Manch crowd of right wing luddites (some combination that!)...

For nearly half of NDA's stint (the total stint across 2 terms), all that Yashwant Sinha did was to somehow dovetail hairy swadeshi notions into policy somehow, missed the boat completely in presenting India as an attractive alternative to East Asia as capital was looking for replacements post East Asian crisis, presided over the UTI scam (it involved "real" money, not notional!), and above all suddenly decided that running a current account surplus should be a laudable objective for the Indian economy!

The chap lacked the right instincts as well as political heft - a disastrous combo...

In terms of "growth" record, in the last 20 years, India has had 4 FMs - MMS, PC, PM and YS, JS - And all of them have had reasonably long stints (>3-4 years), except maybe JS...YS has the WORST record of the lot...By far..

Suraj · Post by **Suraj** » 24 Feb 2011 07:06

Jasoo Mithaiwala was any day a better finance minister than Yashwant Sinha, but ABV could not get him into the job until late into the NDA's only real administration, and he did do well during that brief stint. Pity he didn't get more time. I'd rate him equal to or better than Pranab Mukherjee. Chidambaram is capable, but lacked sufficient political backing, especially in UPA-1. More than dream budgets, we need a finance minister who has enough backing to get things done.

MMS succeeded under PVNR because the latter backed him to do the job. Similarly, Jaswant was ABV's first pick, and did well in his brief stint. PC did not, IMHO, get sufficient support from either MMS or SG in UPA-1; PM is doing well now because he's an institution himself, and has sufficient respect and authority. MMS ideally would have replicated the role of Hayato Ikeda, but that's not quite been the case. He would have been better off left to use his skills in the Finance Ministry, but UPA lacks any ABV-like authority to be the PM in his place. MMS should have moved over to NDA; then I would have my dream team: PM ABV and FM MMS

somnath · Post by **somnath** » 24 Feb 2011 07:22

^^^Or ABV to INC! A dream cabinet should have ABV as PM, MMS as FM, JS as Foreign M, PC as HM, PM as DM and AJ as Law M! National govt

shyam · Post by **shyam** » 24 Feb 2011 07:46

Acharya wrote:
ShauryaT wrote:
YS hand picked by the RSS is a revelation?
This is a false flag and is a personal biased analysis. That cannot substitute for the real work done during that period.

Vajpayee's government had a lot RSS guys. That was the biggest disaster India ever had.

Modi is another example.

So much for the analytical skills.

amit · Post by **amit** » 24 Feb 2011 08:39

ShauryaT wrote:YS hand picked by the RSS is a revelation?

Why not here it from the man himself. Link

Although a strong nationalist and a staunch believer in swadeshi, he had wide area of convergence with the RSS even as there were some issues on which he differed, Sinha says even he consulted RSS leaders before he finalised the 1998 budget who expected him to prepare a swadeshi budget.
{I've always wondered how this consulting RSS on the budget - and other matters - does not/did not amount to extra-constitutional authority but something just and good!}
On his relations with the RSS, Sinha says that one reason for his unhappiness in the finance ministry was that "I had lost the confidence of the Swadeshi Jagran Manch and the RSS, with whom I had worked so closed earlier in the swadeshi movement." There was a widening communication gap between 'them' and 'us', he says.

"The misunderstanding became so serious that Dattopant Thengadi, one of the senior most leaders of the RSS, known as a patron saint of swadeshi, went to the extent of calling me a apradhi (culprit), in a public meeting in Delhi. He described how I had deviated from the path of swadeshi after I had become finance minister", Sinha says.

Poor man fell between two stools. By trying to please everybody, he ended up by pleasing nobody.

And now we have to take him seriously when he pontificates on the economy? Who's veiwpoint is he peddling, the BJP/NDA or the RSS/Swadeshi Jagaran Manch.

Folks may not remember but when the 1991 reforms were initiated with India in dire straits the infamous Bombay Club of cronyism-friendly industrialists like Rahul Bajaj and the SJM - which ostensibly represented the workers and small traders - were the two outfits which made more noise than the Leftists - against the reforms, especially the opening up of the economy.

I'm sure Gurumurthy ji thundering articles from that period are around somewhere on the Net.

ShauryaT · Post by **ShauryaT** » 24 Feb 2011 08:57

^^Over 70% of all office bearers of the BJP are RSS members. Is it a surprise to you, that ministers would consult their party and affiliated organizations?

ShauryaT · Post by **ShauryaT** » 24 Feb 2011 09:04

>>Somnath
>>Oh, absolutely not, its hardly a revelation...It was public info that ABV wanted Jaswant Singh as the Finance Minister, but the RSS didnt trust him (too much of a "liberal"

)..

ABV made the choice and gave it to a man, who joined the party in 1993! He must be more blue then? My preference was, someone neon green by RSS standards, pity he did not get a shot at it but then he had a real job to do at disinvestment.

>>BJP looked around and the only chap with a modicum of economic talent was this extremely immodest man with much to be modest about....Actually given that the alternatives were people like Dattopant Thengadi and Jagdish Shettigar, I guess they didnt have too much of a choice..Yashwant Sinha had managed to ingratiate himself with the Swadeshi Jagran Manch crowd of right wing luddites (some combination that!)...

So, his immodesty and that ABV had the TINA factor is what made him the FM? You must have real sources. We all have our favorites, but what you do need to understand is that the individual in a collective nature of our government, matters only to a certain degree. The role of the SJM, their political influence in the BJP, the role of policy and politics in a political economy have to be understood to get a full picture.

Look, my question was about what issues do we have with the policies in his tenure as finance minister. I was not looking for a personal and politically motivated diatribe. Please, leave the political biases out and stick to economic policies, shall we?

>>For nearly half of NDA's stint (the total stint across 2 terms), all that Yashwant Sinha did was to somehow dovetail hairy swadeshi notions into policy

Is that the reason why Dattopant Thengadi was up in arms against Yashwant Sinha?

>>somehow, missed the boat completely in presenting India as an attractive alternative to East Asia as capital was looking for replacements post East Asian crisis,

I am sure the entire government could have done better in this matter, however, do you have something specific that Yashwant Sinha did not do or do something to hurt this ability to attract capital after the east asian crisis?

>>presided over the UTI scam (it involved "real" money, not notional!),

Are you making excuses for A. Raja now? I am sure you have read all the JPC reports, the tarapore committee report, the Deepak Parekh committee recommendations, the role of the market regulators and the laws that existed in SEBI at that time, the changes brought in those laws by YS and what has happened since then as a result of the changes in SEBI act of 1992.

Even his worst detractors, do not accuse Sinha of corruption. For the fault of not probing deep enough and early enough, while being at the helm during the UTI/Ketan Parekh issues and trusting the wrong set of people, he lost his job.

>>The chap lacked the right instincts as well as political heft - a disastrous combo...

More political bias? Do you know, how much time it takes for a minister to get information, god forbid change policy in our structure of government today?

>>In terms of "growth" record, in the last 20 years, India has had 4 FMs - MMS, PC, PM and YS - And all of them have had reasonably long stints (>3-4 years), except maybe PM...YS has the WORST record of the lot...By far..[/quote] By what economic KPI's?

Here is my bottom line view of YS. The four budgets he presented were well received and were reform oriented, that resulted in a lasting positive impact on the nation, the main results being an arrest on inflation, interest rates & fiscal deficit. Along with reforms, they set in motion a certain momentum with some lasting imact on the economy, which was positive. The stock market crash of 2001/2, Tehelka, the UTI scam, created enough of a negative sentiment that a reshuffle was needed. Jaswant Singh could build upon, what was handed over to him. Overall, in all meaningful measures of economic indicators and its impact on future years is positive. I am more than willing to learn in these areas, if there are some meaningful macro economic issues, that YS failed on.

I have been very clear on how I will measure the performance of a government in a post above and by those measures, YS did well, at least better than the current one's even if there was room to do more. Could it have been better, who knows?
YS has worst record? Show us that worst record. Compare and contrast if you must, but through the records.

ShauryaT · Post by **ShauryaT** » 24 Feb 2011 09:08

Suraj wrote: More than dream budgets, we need a finance minister who has enough backing to get things done.

True and hence personalities, especially in our system count only to a degree. Calling YS term as worst is a direct attack on the ABV record in relation to economic policies and it just does not sqare.

Arjun · Post by **Arjun** » 24 Feb 2011 09:33

vina wrote:Sorry, the RSS economic agenda reeks of a curious mix of extreme left couched in some rhetoric of autarky and is formulated and articulated by a bunch of luddites (Gurumurthy et al for instance).

Since we are on the topic of luddites, how is the RSS any different from The Dynasty - if the RSS stifled the NDA from achieving greater liberalization (which was in any case a far better record than UPA-1), hasn't the Dynasty achieved the same in greater measure in the case of the UPA? Haven't we established on another thread, the track record of the Dynasty (going back to IG) as the primary agent of screwing the country and setting it back by at least 50 years?

Leave alone economic IQ, it seems to me the current Dynasty crop can't hold a candle with the RSS leadership on even basic IQ / educational qualifications !

Suraj · Post by **Suraj** » 24 Feb 2011 09:51

ShauryaT wrote:True and hence personalities, especially in our system count only to a degree. Calling YS term as worst is a direct attack on the ABV record in relation to economic policies and it just does not sqare.

Let's stop getting carried away by emotions here. I too criticize YS as a FM, and if that is an attack on ABV (as ridiculous as that sounds), my response is, so be it. I consider PVNR and ABV as the two best PMs India has had, yet I've no qualms about being 'accused' of criticizing either, if the topic so demands.

You have an issue with the criticism of YS; please address that directly, instead of waving hands and viewing it as an attack on someone else. Maybe there are worse FMs (I could think of a few from the 1960s...) but 'worst' is subjective. Let's keep with the tenor of this thread when we debate. Vigorous debate is fine - just keep it on topic. Thanks.

somnath · Post by **somnath** » 24 Feb 2011 09:58

ShauryaT-ji,

ShauryaT wrote:By what economic KPI's?

The ultimate touchstone, fair or unfair, would be what sort of growth did the FM preside over - and YS has the worst record of all FMs in the last 20 years (incl the UF/Chandrashekhar govts)...Generaly, NDA didnt have a great "growth track record" - barring the last year (2003-04) which too was substantially aided by base effects...But as important would be policy initiatives, as that creates room for growth...On that...

ShauryaT wrote:The four budgets he presented were well received and were reform oriented, that resulted in a lasting positive impact on the nation, the main results being an arrest on inflation, interest rates & fiscal deficit

What exactly were these "reform" measures in the budget? The two major economic legislations passed by the NDA govt were 1) the IRDA Act and 2) the FRBM Act...Both were legacies of MMS/PC earlier...But above all, on IRDA, it was the same Act that both MMS and PC tried desprately hard to pass through the Parliament (constitutional amendment, required 2/3rd majority) and a cussed (or "swadeshi-ist") BJP/SJM-crowd refused cooperation, cheer-leaded by YS, for 4-5 years! However, insurance liberalisation was something that ABV was keen on, and the PMO took special interest to push through (with great bureaucratic support from the exceptional Ramu Damodaran, ABV's pvt secretary)...And YS could get the bill cleared easily, as it was a Congress baby..Part of the reason Dattopant Thengadi was pissed off with YS was because he made that about-turn!

Pretty similar story on FRBM - it was an MMS/C Rangarajan idea from the late '90s...So it was passed without too much ado..Interestingly, YS started by disregarding the Act immediately after it was passed...

On everything else, he earned the sobriquet of being "rollback sinha"..The SJM/RSS crowd were doubly pissed because their man turned out to be a turncoat!

On interest rates and inflation, rates had peaked in 1997-98 thanks to C Rangarajan's hawkishness at RBI, though that is what licked the inflation problem...So inflation had started its downward jourmney by then, so had interest rates...YS had no exceptional role to play...Here's the data..
http://indiabudget.nic.in/es2009-10/chapt2010/tab51.pdf

On fiscal deficit, you can see his record here..

http://indiabudget.nic.in/es2003-04/cha ... chap22.pdf
http://indiabudget.nic.in/es2009-10/cha ... pter03.pdf

Random, no better (or worse) than any other FM..(To me, frankly fiscal deficit is a gora economist issue, its really not a big deal with India)...

ShauryaT wrote:Are you making excuses for A. Raja now? I am sure you have read all the JPC reports, the tarapore committee report, the Deepak Parekh committee recommendations, the role of the market regulators and the laws that existed in SEBI at that time, the changes brought in those laws by YS and what has happened since then as a result of the changes in SEBI act of 1992

Well yes, actually I have read all those reports in various degrees over the years - not sure how the Tarapore committee is relevant here though......The charge on UTI against YS is not of moral turpitude (though no one really investigated how large corporate investors like Bajaj Auto exited US64 @ the g'teed high NAVs just beore the scam broke

!), but of incompetence...It was under his watch, it was brewing for a long time, an he did jackshit about it till shit hit the fan...the UTI issue had nothing to do with the regulatory framework, it was about the organisational structure and objective and running of UTI, which was long passe...

The prime economic policy initiatives of the NDA - the roads programme and the partial liberalisation of capital account - were both sponsored by non-YS individuals..Former was ABV's baby, the latter was Jawant Singh's initiative in the dying days of the govt...JS could do what he could because he had the right instincts and he had political heft (read: suport of the PM)...YS had neither...YS was/is nothing more than a prty-hopping mediocrity who didnt even have enough brains to give an intellectual rationale for his convenient somersaults...

amit · Post by **amit** » 24 Feb 2011 10:00

ShauryaT wrote:^^Over 70% of all office bearers of the BJP are RSS members. Is it a surprise to you, that ministers would consult their party and affiliated organizations?

Heading Suraj's advice not go off track, I'll not comment on this point (tempting as it is!

)

However, why don't you list the reasons that why you think that Yashwant Sinha interview is worth taking seriously so that it can form the basis of an interesting debate.

amit · Post by **amit** » 24 Feb 2011 10:10

Arjun wrote:Since we are on the topic of luddites, how is the RSS any different from The Dynasty - if the RSS stifled the NDA from achieving greater liberalization (which was in any case a far better record than UPA-1), hasn't the Dynasty achieved the same in greater measure in the case of the UPA? Haven't we established on another thread, the track record of the Dynasty (going back to IG) as the primary agent of screwing the country and setting it back by at least 50 years?

Leave alone economic IQ, it seems to me the current Dynasty crop can't hold a candle with the RSS leadership on even basic IQ / educational qualifications !

One reason why I like this forum. You start with a premise, make a few points. Debate with others who don't agree with the premise for as long as it takes to become punch drunk with arguments and counter arguments that simply go past each other and then move on, after of course declaring a great victory.

Since the INC has been in power for such a long time since Independence and since willy nilly the Indian public has voted for members of the Gandhi family as PM, it's easy to put the blame for all ills on them - the Dynasty as you call them.

However, you seem to forget that there's one crucial difference between the Dynasty and RSS. And that is the Dynasty is unashamedly political creatures - you may not agree with their politics but you cannot deny that - and they regularly take part in elections and win some and loses others.

The RSS on the other hand is supposed to be an apolitical organisation which is not answerable to voters during elections. Yet it can decide on who's going to be the FM and that FM actually consults the RSS before formulating the budget which can affect my wallet.

Also, if IQ and basic qualifications are the measure of leadership, then surely you must secretly think that MMS is the best PM we've got since independence?

Don't worry I won't let out on this secret!

somnath · Post by **somnath** » 24 Feb 2011 10:12

Arjun wrote:Since we are on the topic of luddites, how is the RSS any different from The Dynasty - if the RSS stifled the NDA from achieving greater liberalization (which was in any case a far better record than UPA-1), hasn't the Dynasty achieved the same in greater measure in the case of the UPA? Haven't we established on another thread, the track record of the Dynasty (going back to IG) as the primary agent of screwing the country and setting it back by at least 50 years?

Leave alone economic IQ, it seems to me the current Dynasty crop can't hold a candle with the RSS leadership on even basic IQ / educational qualifications !

Not much...Funnily not much to choose between the dogmas of RSS, the Left and the Congress Left! Remember how Ram Naik invoked Indira Gandhi's bank nationalisation when he went around publicly sabotaging his own govt's divestment of BPCL/HPCL?

though must say that the current crop in the dynasty doesnt try to build its own ideas in vacuum - their advisors are hard to quarrell over on "quality" -Jean Dreze, Arjun Sengupta, Suresh Tendulkar - these guys have their hearts at a different (to me, wrong!) place, but their heads are firmly in the right slot! Unimpeachable...Not something that you can say about Dattopant Thengadi and Govindasharya - the economic ideologues of RSS!

The RSS on the other hand is supposed to be an apolitical organisation which is not answerable to voters during elections. Yet it can decide on who's going to be the FM and that FM actually consults the RSS before formulating the budget which can affect my wallet

Good point, Amit...It is something that was always the contentious issue in NDA's time...A bunch of shadowy characters with (sometimes) funny names influencing policy - and these guys never face the ballot box...

Arjun · Post by **Arjun** » 24 Feb 2011 10:14

Amit, I find it interesting that you had several impassioned posts on another thread where you argued AGAINST rating the various governments that we've had on economic performance. And here you are suddenly finding no objection to rating the various FMs on the same issue...Shall I assume your previous posts were just a bunch of sanctimonious tripe?

In any case, I have no objection to rating governments and FMs since that is the only way we move forward. Will cross-post some of my earlier posts on this topic as well.

Arjun · Post by **Arjun** » 24 Feb 2011 10:37

amit wrote:Also, if IQ and basic qualifications are the measure of leadership, then surely you must secretly think that MMS is the best PM we've . got since independence?

Don't worry I won't let out on this secret!

Frankly, I have no major problems with the Congress without the Dynasty. I agree PVNR was one of the best PMs we had...MMS the only issue - which is a major one, is that he lacks basic leadership qualities. Other than that he is probably tolerable.

The reason I brought up the Dynasty's IQ etc was because I see a trend of folks implying that the 'knickerwallahs' are luddites and antideluvian. I was merely pointing out that despite appearances - I would bet on their IQ being higher than our honorable Clown Prince and Queen.

Will also reply to your other point on separation of executive leadership from actual power by eod - have work to attend to now.

amit · Post by **amit** » 24 Feb 2011 10:56

Arjun wrote:And here you are suddenly finding no objection to rating the various FMs on the same issue...Shall I assume your previous posts were just a bunch of sanctimonious tripe?

Here's another reason why I like this forum so much - the skill of some posters to subtly change the parameters of the debate and thus plant IEDs for unsuspecting low IQ posters like myself, thank god I spotted this one!

(Please don't take it personally Arjun, it's just a joke).

This Yashwant Sinha, topic started with somebody posting that NDTV interview where he compares today's situation with 1991.

There were some discussions about his RSS connections and my first post on the issue was to quote what he himself wrote about this connection in his book. The second was to ask a poster to enumerate why he thought the interview was important.

The last one (before this) was to your great post about Dynasty = RSS (which could also be construed as meaning that both INC and BJP suffer the same problem). And your IQ+qualification=quality of leadership.

Now can you tell me where I got into this comparison business? Did I make any post rating the FMs or one supporting the ratings?

However, for record I think Yashwant was a bad FM (which does not mean I think JS or PC or PM etc are on a rating scale better FMs - please note) simply because of his Swadeshi Jagaran Manch type baggage. And this is obvious in the his own comments which I posted. I think any FM who comes to the job with ideological baggage, whether is for the Rightist variety or Leftist is not a good candidate for a job as complicated as that of the FM of India.

Now if you take that as making my earlier posts sound like sanctimonious tripe, well then boss it's a free country, all I can say is you're welcome.

putnanja · Post by **putnanja** » 24 Feb 2011 10:59

What exactly has been the track record of UPA-1 and UPA-2 wrt reforms?

1. They failed to continue the disinvestment policy of NDA and don't have anything to show for it
2. They bypassed the APM for petrol/diesel/LPG/Kerosine etc. And they haven't rationalized the subsidies
3. They haven't changed the food subsidy model, and recently announced a panel to look into it.
4. Infrastructure has barely improved. Apart from privatizing Mumbai and Delhi airport, there has been no noticable growth in roads/rails/ports etc. The miracle of railway growth under lalu has turned out be more of a mirage.
5. No pension reforms, even though BJP supported it in UPA-1. The govt didn't want to piss off the left at that time
6. No Insurance reform so far
7. No change in the fertilizer subsidy program

The only major achievements so far are:

1. RTI act. This, according to me is the singular achievement of UPA which has brought some transparency in the system. This is their best achievement so far.
2. NREGA act. This has mixed reviews. While it provided the much needed employment to the rural unemployed, and has curbed starvation related deaths, it has also led to shortage of farm labourers in progressive states. Even Bihar CM Nitish Kumar complained of shortage of farm workers due to NREGA act.
3. The nuclear pact with US, though the jury is out on that one on whether it is beneficial to India in the long run.
4. VAT and GST. This has one other success after the RTI act. GST is still to be finalized though.

The government is somehow just trying to pass time and get to the end of its term. Regarding the NAC, the less said the better. They have grandiose plans, but haven't offered any half decent options to finance any of their schemes. The deficit is increasing and there aren't any plans to control them. With a slew of NAC proposed projects in the pipeline, I don't know how they can control the deficit.

There hasn't been a single minister in UPA-1 and UPA-2 who can be rated above 6 on scale of 1-10. PC, after he became the home minister, may be the best of the lot. There is no accountability, no one running a tight ship and each minister is doing their own thing with little or no guidance from the PM. No one expected much from MMS, but even sonia isn't ensuring that there is cohesion and sense of purpose in the government.

Arjun · Post by **Arjun** » 24 Feb 2011 11:00

somnath wrote:Funnily not much to choose between the dogmas of RSS, the Left and the Congress Left!

We need to be more specific...The Congress Left doesn't cut it - this faction is led by the Dynasty. I am fine with your clubbing the RSS, the Dynasty and the Left.

I am familiar with the dogmas of the latter two. My suspicion is that the RSS deserves more credit than the Dynasty-manufactured view of its supposed 'dogma' - but if you are saying we need to rid our politics of all three, I am more than happy to agree.

amit · Post by **amit** » 24 Feb 2011 11:02

putnanja wrote:1. They failed to continue the disinvestment policy of NDA and don't have anything to show for it

Could you elaborate a bit more on this disinvestment policy of the NDA and what it exactly achieved in terms of actual disinvestment in both monetary terms as well as actual companies disinvested?

Would be much obliged if you do.

TIA.

putnanja · Post by **putnanja** » 24 Feb 2011 11:14

amit wrote:
putnanja wrote:1. They failed to continue the disinvestment policy of NDA and don't have anything to show for it
Could you elaborate a bit more on this disinvestment policy of the NDA and what it exactly achieved in terms of actual disinvestment in both monetary terms as well as actual companies disinvested?

Would be much obliged if you do.

TIA.

BALCO, Modern Bread, VSNL, India Hotels, IPCL, Paradeep phosphates, CMC, Hindustan Zinc etc were some of the major PSUs privatized during NDA rule.

Aditya_V · Post by **Aditya_V** » 24 Feb 2011 11:21

Saar Why looking at the NDA record please see

1) 1998 Tests- had economic sanctions put in place
2) 2001 Jan Earthquake in Gujurat- Huge impact.
3) There were 3 bad Monsoons during that period of 6 years.

a) General Growth accross the world was pretty poor compared in 1999-2004 when compared with 2004-07
b) If someone builds good foundation for you can always build a good building on it, if you have a 3rd front Government before which has left everything in Shambles, it will take you 3-4 years before sorting out issues before you can Build.
c) There was no proper Telecom policy, no Golden Quadrilateral Project nearly completed etc when the NDA took over, the truth is that telecom and other infrastructure systems, vision requirements were in a far better place when the NDA left the Government than when they inherited it.

Yes, the RSS is not publically elected- NDA consulting them is not for public Good, but I see many Foreign Entity Associated NGO activists holding Key positions, deceiding our Education policy. Doesn't this worry you too. Which is better Foreignors or Indians being consulted?

There are things done by the NDA which offcourse no media reports, the disinvestment of BALCO for example- the way the contract was designed, when BALCO's 51% was sold being a Government run organisation, its value was not great, but the agreement was so designed that when the rets had to paid at Market prices after 8 years of running. This meant Sterlite had to cough up a lot more to the Government in 2009 which helped the Budget defecit a lot.

Regarding NREGA- yes it is Good, but there were Schmes like food for work etc which were pretty good. The real reason why the poor were much better off in 2009 than in 2004 was that we had 6 straight good monsoons and I wish this country continues to have anther 15 continous years like this. 2009, 2010 moonsoon has been a bit a Truant and impact of that has been seen.

somnath · Post by **somnath** » 24 Feb 2011 11:22

putnanja wrote:What exactly has been the track record of UPA-1 and UPA-2 wrt reforms?
1. They failed to continue the disinvestment policy of NDA and don't have anything to show for it
2. They bypassed the APM for petrol/diesel/LPG/Kerosine etc. And they haven't rationalized the subsidies
3. They haven't changed the food subsidy model, and recently announced a panel to look into it.
4. Infrastructure has barely improved. Apart from privatizing Mumbai and Delhi airport, there has been no noticable growth in roads/rails/ports etc. The miracle of railway growth under lalu has turned out be more of a mirage.
5. No pension reforms, even though BJP supported it in UPA-1. The govt didn't want to piss off the left at that time
6. No Insurance reform so far
7. No change in the fertilizer subsidy program

Putnanja-ji, it is good tht you atempted a factual summary...It lays down the bare facts..Now to the facts..

1. Here is the disinvestment proceeds over the years..
http://www.divest.nic.in/SummarySale.asp
The NDA govt averaged about 5k crores p.a, the UPA govt about 9k! And the NDA figures should be adjusted downwards for the amounts received for stake sale in oil companies - that was a massive "Ram Naik" fudge - one oil company sold its stake to another, with the same favour returned!

2. That is completely wrong..The APM (or the govt fixing oil prices) was zealously maintained in practice by Ram Naik, and subsequently by UPA-I as well...It was only recently that oil prices were partially freed up for marketing companies (only on petrol)...

3. Food subsidy is a complex issue no govt has touched, NDA didnt do anything about it either...In UPA II, the cash transfer scheme piloted by Nanadan Nilekani this year should see some movement forward..

4. Infrastructure movement has been variable..The highways roads programme lacked the vigour of ABV's time..But PMGSY has been moved forward..Telecoms (surprise!) has seen a faster movement in UPAI and IIof course airports are better..So its variable, it was so in NDA's time as well!

5. Wrong...The PFRDA has already been set up through an executive order..Was done in 2005..The regulator is there, fund managers have been pointed, the central govt (and some state govts) have shifted to the NPs, it has also been opened up to non-govt individuals...The Act when passed will simply codify these things as law and remove some inconsistencies, but the gist of the reforms has already been implemented..

6. As in greater FDI in insurance? the financial crisis (and the issues with AIG) put paid to that..But it is on the agenda..Though FDI isnt that big a deal for the sector really...

7. Wrong...It was UPA II(?) that finally rang in the much-needed changes in the fertiliser subsidy framework, movin away to a nutrient-based subsidy system...

amit · Post by **amit** » 24 Feb 2011 11:28

putnanja wrote:BALCO, Modern Bread, VSNL, India Hotels, IPCL, Paradeep phosphates, CMC etc were some of the major PSUs privatized during NDA rule.

I was hoping for a dollar or rupee number by I see Somnath has already provided one

. The first UPA govt was hobbled by the Left on whose support the govt existed. This govt has done the disinvestment in Coal India which, as far as I can recall, netted $13 billion.

However, for the NDA disinvestments, I'm sure you've read articles like this one

The Comptroller and Auditor General on Friday criticised the previous NDA government for undervaluation of a number of PSUs, including Balco and VSNL, where equity was disinvested.

"Audit examination reveal instances of far too conservative assumptions made by the global advisors in seven out of nine PSUs. The assumptions had the potential of adversely impacting the business valuation, based on which the reserve price was fixed for disinvestment," CAG said in a report on disinvestment during 1999-2003.

"Audit noticed a general trend in the disinvestment of PSUs that majority of bidders, who had initially submitted Expression of Interest, withdrew during the process during due diligence limiting the competition," the report tabled in Parliament said.

It said as many as 48 out of the 70 parties interested in becoming strategic partners had withdrawn and only in two cases (IBP and IPCL) more than two financial bids were received indicating that the competitive tension generated in the process was not encouraging enough to have maximised the value of stake under disinvestent.

The CAG attributed the lack of adequate interest among the prospective investors to the failure of global advisors, who were unable to generate adequate competition at the bidding stage.

"The Government also constituted to this situation by delaying crucial decisions, affecting the financial health of the PSUs," it said.

The report also said that the exercise of asset valuation did not appear to have been undertaken with due seriousness in as much as the valuers were generally not given enough time and core and non-core assets had not been segregated before valuation.

"As a result, the land was still in custody of the disinvested company in which the buyer had management control and could acquire majority shareholding," CAG said.

"In case of CMC, PPL, IPCL, IBP and Modern Foods, the government had put options while in Balco and VSNL the strategic partners had call option. In case of Hindustan Teleprinters, no such option was incorporated," CAG said.

The report also criticised the government for including Post-Closing Adjustment Clause under which the strategic partners could claim compensation from the Government for liabilities arising out of the information that was not disclosed earlier.

In case of Modern Foods, the buyer had claimed Rs 17.48 crore as compensation and the government has already paid Rs 12.64 crore to it. The claims of Balco, Hindustan Teleprinters and Paradeep Phosphates were still under consideration of the Government.

For future disinvestment, CAG has advised the Government to fix accountability of all involved in the process, ensure coordination between various arms of the Government and operationalise the National Investment Fund so that end use of the funds could be monitored.

Reacting to the CAG report, which came out in 2006, this is what the Arun Shourie, under whose watch the Disinvestment took place said

"I compliment Finance Minister P Chidamabaram for being fair as the Ministry's response on various issues, including valuation process and number of bidders in the CAG report, completely endorses our (NDA Government's) views."

The point I'm trying to make is that it's not easy to make a report card and just say OH the NDA rocks in these areas and UPA sucks and the UPA was good in these areas and NDA was not up to the mark. That's why I've written previously - and which Arjun ji thinks is sanctimonious tripe - that it's very difficult to do clear-cut ratings of who's record has been better in reforms.

The bottomline, for me at least, is that since 1991, despite the limitations of coalition politics, every single dispensation which has been in power has generally been pro-reform. Some have been able to achieve a bit more here and bit more there, depending on the exigencies of the situation.

JMT

Aditya_V · Post by **Aditya_V** » 24 Feb 2011 11:32

somnath wrote:[
Putnanja-ji, it is good tht you atempted a factual summary...It lays down the bare facts..Now to the facts..

1. Here is the disinvestment proceeds over the years..
http://www.divest.nic.in/SummarySale.asp
The NDA govt averaged about 5k crores p.a, the UPA govt about 9k! And the NDA figures should be adjusted downwards for the amounts received for stake sale in oil companies - that was a massive "Ram Naik" fudge - one oil company sold its stake to another, with the same favour returned!

Are the Nos inflation adjusted, woundnt 5K in 1998 be higher than 9K in 2009. Also lets not forget NDA rule from feb 99- Oct 09 was a lame duck Caretaker Government, so actual NDA rule was there for only 5 years.

The point I'm trying to make is that it's not easy to make a report card and just say OH the NDA rocks in these areas and UPA sucks and the UPA was good in these areas and NDA was not up to the mark. That's why I've written previously - and which Arjun ji thinks is sanctimonious tripe - that it's very difficult to do clear-cut ratings of who's record has been better in reforms.

The Situation at each period was different, we can compare given the situation at that point of time and alternatives whether the decesions taken were good or Bad.

somnath · Post by **somnath** » 24 Feb 2011 11:45

Aditya_V wrote: a) General Growth accross the world was pretty poor compared in 1999-2004 when compared with 2004-07
b) If someone builds good foundation for you can always build a good building on it, if you have a 3rd front Government before which has left everything in Shambles, it will take you 3-4 years before sorting out issues before you can Build.
c) There was no proper Telecom policy, no Golden Quadrilateral Project nearly completed etc when the NDA took over, the truth is that telecom and other infrastructure systems, vision requirements were in a far better place when the NDA left the Government than when they inherited it.

Again, Aditya-ji, some data...

a) Look at global growth rates here..http://www.imf.org/external/pubs/ft/weo ... 10alla.xls

Not much difference in avg global GDP growth between NDA and UPA periods..

b) WEll, NDA built on the foundations of the PVNR/MMS effort, and PC's so-called dream budget that finally rationalised direct taxes!

c) What do you mean by "no proper telco policy" etc? You think Pramod Mahajan's shenanigans With RCOM were symptomatic of a "proper" telecom policy? The heavy lifting on telecom was done by MMS/PVNR when they opened the sector up..After that, it was a question of the right technology in place and right economic model being developed...

Dont get me wrong - NDA had some good ideas, and the core team (ABV, JAswant Sinh, Aruns JAitley, Shourie) had the right instincts...But they were not partculatrly different from the Congress/UPA....